How to Get a Pay Raise Without Increasing Your Income

Do you want a pay raise? Stupid question, huh? Do you wanna know how to get a pay raise without increasing your income? Think about that question for a second. How in the world can I get a pay raise without an increase in income? Stay tuned for the answer to that question below.

But first, I want to share a story. When I was 16 years old, I had a summer job working at the Bechtel Nuclear Power Plant in Port Gibson MS. I was working as an electrician helper as the plant was under construction. My job was to pull cable in cable trays approximately 20 ft off the floor. That's right, the cable trays were just under the ceiling. I would lay flat on my back, apply considerable mud in both hands, and the electrical cable would slide through my hands to the next guy in the cable tray. Our quota was 3,000 feet of cable per day. I was paid $6.25 per hour, with significant overtime if you wanted it.

It was a great job for me at the time. I would work as much overtime as I wanted. Every week I would get paid and would bring home anywhere from $250-$500 depending on the overtime. As a helper we had to account for the number of feet of cable laid per day, per 2 man crew. As we began to calculate our footage per day, my my co-worker and I had an amazing discovery. We had outpulled everyone else in the whole plant by 1,500 feet for the first 4 weeks.

That's great I thought I first. Then, reality hit me like a ton of bricks. The other 20 crews of 2 men teams that we had outperformed were paid exactly the same as me, $6.25 per hour. I thought, what's fair about that?

So, my question is "Do you wanna be paid per your performance, or like everyone else?"

Here's how I got my raise without increasing my income.

For simplicity sake, let's say I earned $500 for the week and brought home $300 after taxes. I just gave $200 in tax revenue to the government and they didn't do anything to earn that money in those cable trays. After careful consideration and legal discussions with my dad, I formed a sub-S corporation and hired myself. I changed my tax withholding from my employer, they now paid the corporation the gross pay of $500, and any deductions the corporation had were paid for by the corporation. These deductions included expenses for my automobile, insurance, my gas, my lunches, etc.

In essence, the corporation paid for my automobile and my expenses that were incurred in earning that $500 weekly. I legally cut out the government controlling my deductions. I simply changed the form of my earnings from employee to business owner. I was now spending before tax money, not after government taxed money.

My average take home increased from $300 per week to approximately $400 per week simply by changing the form of the payee from personal to corporate. That's a $100 per week pay raise or $5,000 annually. And what's more, I paid for an automobile by using this structure. If you are making $20,000 per year and get a $5,000 per year pay raise, that's an increase of 25% annually, without earning more income. I even bought more equipment for my company at year end to avoid corporate tax.

In today's world, I use an LLC for my business earnings, and legally deduct my share of earning income. I'm no tax expert so make sure an consult your accountant.