Lesson Plan: Earned Income vs. Entrepreneur Income – Who Really Wins?
- The Chairman
- Aug 19
- 2 min read
Grade Level: 9–12
Subject: Financial Literacy / EconomicsClass Length: 90 minutes
💡 Introduction – Two Paychecks, Two Different Rules
Most people live off a paycheck from a job. They earn wages, and the government takes taxes before they can even pay rent or buy food. That’s earned income.
But business owners and entrepreneurs live by a different set of rules. Instead of being taxed first, they can:
Deduct business expenses (rent, vehicles, meals, travel, supplies).
Pay taxes only on their profits (income minus expenses).
This changes everything. An employee pays taxes before expenses; a business owner pays taxes after expenses. That’s why entrepreneurs often build wealth faster—they control when and how they pay taxes.
🎯 Objectives
By the end of this lesson, students will be able to:
Compare earned income vs. entrepreneur/business income.
Understand how employees pay taxes first, while business owners deduct expenses first.
Recognize the power of writing off business expenses.
Build a sample side-by-side budget showing how two people with the same income end up with very different freedoms.
📜 Florida Sunshine State Standards Alignment
SS.912.FL.1.1 – Explain how personal financial decisions are influenced by incentives, institutions, and individual choice.
SS.912.FL.2.3 – Develop a spending and saving plan that includes financial goals.
SS.912.FL.3.2 – Explain how individuals incur costs and realize benefits when consuming, saving, and investing.
SS.912.E.1.2 – Describe how economic choices made by individuals and government impact standard of living.
📝 Class Work Directions
Part 1 – Research Phase (20 minutes)
Students research:
Average paycheck in Broward County.
Tax rates for earned income.
Common business expenses that entrepreneurs can deduct.
Part 2 – Budget Comparison (30 minutes)
Scenario 1: Employee (Earned Income)
Income: $4,000
Taxes: $800 (20%)
Expenses: Housing, Food, Transportation, etc. come after taxes.
Savings (Freedom money): whatever is left.
Scenario 2: Entrepreneur / Business Owner
Income: $4,000
Expenses deducted first: $1,500 (office rent, phone, transportation, meals, supplies).
Taxable income: $2,500
Taxes (20% of $2,500): $500
Savings (Freedom money): more money left over for investing.
Category | Employee ($) | Entrepreneur ($) |
Income | $4,000 | $4,000 |
Taxes | $800 | $500 |
Expenses | $2,700 | $2,500 (deductible) |
Savings/Freedom | $500 | $1,000+ |
Part 3 – Class Discussion (15 minutes)
Students compare:
Who had more money left after taxes?
How business owners legally lower their taxes.
Why financial freedom often comes from owning a business or investing, not just working a job.
Wrap-Up (10 minutes)
Reflection Prompt:
“Why does the government tax employees differently than entrepreneurs?”
“What would you rather be—taxed first like an employee, or last like a business owner?”
🎨 Visual Aid
Two side-by-side pie charts:
Employee (Earned Income) – Taxes first, expenses after.
Entrepreneur (Business Owner) – Expenses first, taxes on what’s left.
This simple image shows students that the order matters.
📌 Assessment
Completed budget comparison.
Reflection paragraph on whether they’d prefer to be an employee or entrepreneur.
Comments