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How to Move from an S to a B

One of the more common questions we, the Rich Dad Advisors, get asked is, “How do I go from being an S to a B?”

The question is in reference to the CASHLFOW® Quadrant seen below.

For those who’ve already been initiated into the world of Rich Dad, you know the CASHFLOW Quadrant is a tool used by Robert to help describe the different ways people receive income.

I won't go into great detail about the different quadrants in this article. But for those who may be unfamiliar, the CASHFLOW Quadrant provides context and clarity as to what each person does in each quadrant. In other words, where do people get their income from?

As an example, if you receive your money as an employee in the form of a paycheck, you are an”E”.

Or, if you receive your money from billing on an invoice per job, you are a “S”. An example of an S would be an electrician for a dentist. They perform a job, then send an invoice and are paid when the client pays the invoice. S stands for a small business owner or a sole proprietor.

Studying with The Man

Probably the biggest benefit of being a Rich Dad Adviser is partaking in exclusive studies with Robert Kiyosaki.

The beauty of the CASHFLOW Quadrant is how it shows you that you have a choice. With the capital E and S on the left side, it is one way of looking at income. With the B and I on the right side, it offers another perspective.

When you see both sides, you realize that you have a choice.

In school, most of us were not taught the big picture. We were taught that to be successful you had to work really hard to get good grades and then go to a really good school to work even harder only to get a high-paying job to work even harder still.

We are “schooled", not educated, to be employees.

If you are really smart, however, you are encouraged to be a doctor or lawyer.

Again, what makes the CASHFLOW Quadrant so important to understand is that you have a choice. Do you want to be in E, and S, a B (big business owner) or an I.

It's all a matter of who you are at your core. There is nothing wrong receiving your income from any of the quadrants. All of the quadrants are good. Each of them plays an important role in the economy.

Only you know what quadrant fits your lifestyle.

Here at Rich Dad, our job is to give you the financial tools to help you achieve your dreams in any quadrant.

Think about how different your life would be if school asked you this simple question, “What quadrant would you like to be in?”

“Working” in the B Quadrant

One of the things that Robert constantly discusses is the importance of understanding how someone in each quadrant is taxed.

As the graphic shows, someone on the right side of the quadrant pays far less than someone on the left. Pay special attention to someone who earns their income as an S. And S pays far more taxes than almost anyone else.

Not many people realize this but the Internal Revenue Service, the collection company for the United States government, defines a B business as a company that has 500 employees or more. That changed in March of 2010, when then President Obama passed the Affordable Health Care Act which now defines a big business as 50 full-time employees or more. This has greatly affected how small business owners are impacted.

This simple change in the law can dramatically and positively impact your business, your life and your income.

This is good news. If you’re already a small-business, why not expand to take advantage of those big-business tax advantages?

If you want to learn more about how to run a socially responsible big business, grab a copy of our book, The Social Capitalist.