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updated 12/22/2012 12:47:32 PM ET 2012-12-22T17:47:32

Amid all the talk about the fiscal cliff, one thing that the experts agree on is that the status quo on the Bush era tax-cuts isn't likely to survive. Tax policy is inevitably bound to change 2013. No matter what tax bracket you are in, taxes are probably going up. They just may rise for some more than for others.

You don't have to take this change sitting down. There are things we can do to combat the effects of these changes, and potentially not even feel any of the pain.

Bottom line: Either we need to increase our income or decrease our costs. It's obviously unrealistic to think we can go into an employer this month and say "I need to a raise because of the fiscal cliff." Many people are already pinching pennies. Something has to give.

Related: What's the Best Outcome for Small Business on the Fiscal Cliff? (Opinion)

I'm convinced that starting a business can be a good solution for many people, hands down. Here's why:

  • You can increase your cash flow. Even if you start something small, countless small-business ideas can easily generate $200 to $300 a month. Anything. Start a service business filling a need you recognize, sell a product on the web with a new internet-based business or venture into real estate with creative acquisition strategies. These few extra hundred dollars a month could add up to $3,000 or more by the end of the year and eliminate any impact the fiscal cliff could have on your budget.
     
  • You can convert personal expenses to business expenses. By starting a small business, it gives you the opportunity to write-off so many expenses that would have otherwise been considered personal. For example, cell phone, travel, dining, entertainment, home office, PDAs and a laptop (just to name a few), could now be legitimately a write-off by starting a small business. By using these write-offs, your newfound income, no matter how small, could become tax free in the early stages. If the expenses initially outpace the revenue, the losses could be used to offset other income and your W-2.
     
  • You can get more health-care options. Issues related to health-care costs and coverage are only going to increase with the rollout of Obamacare in 2013. Small-business owners have a unique opportunity to write-off their insurance premiums, health-care costs and even obtain insurance policies nonbusiness owners wouldn't be able to get their hands on. The costs of Obamacare are going to be a major part of tax policy changes in 2013. Many don't see it coming. Having a small business will give you more options right at your fingertips.

    Related: Should Small Business Fear the Fiscal Cliff? (Opinion)
     
  • You can start building long-term wealth. The fiscal cliff changes aren't just threatening our ability to pay our bills next month, but our ability to retire and be financially secure in the future. That's why starting a small business isn't simply just about creating cash flow next month or later in the coming year, it's about having options and building long-term wealth. Are you really going to rely on Social Security and that measly 401(k) or Individual Retirement Account you've been trying to build? Small business is a proven method to build equity in a project or real estate that can far surpass stock ownership or a savings account. 

A word of caution: I've seen too many people go overboard with a newfound concept of small business. These folks may even be tempted to quit their day job and jump in with both feet. Be careful. Make sure you have a fallback for income when you start your new business. Having a small business on the side is a great way to get started with entrepreneurship, but our expectations have to be realistic.

Don't feel capital is critical to get started. Many people get hung up not having extra money to develop a business idea. But you don't always need a lot of capital to start a business. Investigate multiple ideas and even discuss the possibility of partnering with others to pool resources to launch your business.

Small-business owners really do have an advantage over average taxpayers, so don't let the opportunity to save money slip you by. Here are few steps to get you started:

  1. Start with a basic business plan. Write down your ideas and develop your concept.
  2. Open a new bank account as a sole-proprietorship to track income and expenses.
  3. Consider a "doing business as" (DBA) filing to reserve your business name and begin marketing.
  4. Start selling product or services. Test your idea. Make some money.
  5. Track your expenses, and be ready to expand your idea if things go well.

Too many people say it's a risk to start a small business. I say it's too risky not to start a small business. Why not have something to fall back on if your day job gets threatened? Get started today. Entrepreneurship isn't meant to be a get-rich scheme or tax dodge. It's a way to build lasting wealth and have flexibility doing what you love.

Related: Inside What Small-Business Owners Had to Say to Obama About the Fiscal Cliff

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