1Cr Business vs. 1Cr Salaried Income
Being self-employed or an employee both have their own pros and cons. It's a reasonable question to ask yourself at the outset of your career: should you establish your own business or work for someone else? Many individuals want to be in charge of everything; others want a solid wage and not to be accountable for every choice.
There is no universally correct solution; all you can do is examine the possibilities and make your own decision.
If we cut straight to the point, Long Term Capital Gain on shares has been one such source of Income where taxpayers have always been looking for relief and ways to reduce their tax liability (LTCG on shares arises if they are held for more than 12 months).
The distinctions between work and self-employment include freedom, dangers, and financial benefits. In the end, there is no one-size-fits-all solution; only you can determine which path is best for you. To make your perplexity easier, we have got your back with a list of pros and cons!
Having a job gives you more security.
People work for a variety of reasons, the most important of which is security. Even if one is laid off, one can always find another job; however, when a firm fails, one risks losing much more than that, and recovering from the loss and starting afresh in a business can be an arduous path.
A job provides a reliable source of money.
Yes, earnings seem exciting and intriguing, but let's face it, the figures will never stay constant and will change from time to time based on the business, but with a job, one is guaranteed a fixed sum each month.
Moreover, you require capital and investments in the business. Furthermore, as a self-employed individual, you will have to incur fixed Business expenses irrespective of the income, while there is no such compulsion in salary income.
You are your own boss in a business.
In business, the entrepreneur is their own boss, but in the workplace, one must report to a superior. People conducting business are not required to obey rules established by someone else in the firm; instead, they develop their own regulations.
At the same time, the employers have to comply with a superior's orders and rigorous adherence to the company's and the employer's guidelines.
There are some advantages and disadvantages for both Salary income and business income when it comes to the tax implications.
For a Salary Income:
1. Compulsory TDS will be deducted,
2. Cannot claim a deduction of expenses in salary, income; only limited Deductions and expenses can be claimed: 80C, 80D but only up to a certain limit,
3. Expenses are allowed only up to a certain limit, e.g., Medical expenses for senior citizens’ parents.
4. Surcharge: Will increase with the Income; it cannot be avoided.
For a Business Income:
1. Tax need not compulsorily be deducted on every business income.
2. No limit on claiming expenses. E.g., Fixed assets purchased, office expenses, whatever expenditure incurred concerning business.
3. GST input can also be claimed.
4. There are more Statutory compliances in the case of a business like a stat audit, GST filing, TDS Compliance, etc.
5. Only ITR needs to be filed.
6. The surcharge is avoidable.
A person who runs their own business is accountable for making their own decisions and is free to put them into action. The individual executing the work, on the other hand, needs the boss's consent before making and implementing choices.
People conducting business are not required to obey rules established by someone else in the firm; instead, they develop their own regulations.
At the same time, the profession necessitates a person's rigorous adherence to the company's and the employer's guidelines.
A job's potential for advancement is restricted. Your sole opportunity for advancement is when you are promoted from your current position, you might even stagnate in one place, both financially and in terms of personal development.
A business may assist you in a variety of ways, your hard work is most likely to be rewarded, and there is a vast possibility for growth and success.
Finally, there really is no way to answer whether 1 crore in business is better than 1 crore in salaried income; both have multiple factors involved. Irrespective of the risks and inhibitions, in both roles, one cannot gain success without hard work, determination, and perseverance.
It was Booker T. Washington who said, “I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has had to overcome while trying to succeed.”