Reduce Your Self Employment Taxes.
I’ll Show You How.
It's Just Plain Wrong To Pay More Taxes Than You Have To.
You work hard for your profit. Keep more of it.
What To Do With The Extra Cash?
It’s up to you of course, but you could always…
Invest It
Give It
Enjoy It
Here's The Process...
Fact Finding
I will walk you through sending me the information I need to crunch the numbers.
Implement Recommendations
I will make sure you understand your options and help you make the right choices.
Pay Less Taxes
Take more home.
What Are Self Employment Taxes And Why Are They Just Plain Wrong?
Remember working that W-2 job and seeing “FICA” taxes come out of your paycheck? It may have been labeled “Social Security” and “Medicare” as well.
That was 7.65% of your whole paycheck…
Every. Single. Time.
Did you know that your employer had to match that 7.65% tax that you paid? So if you made $100, you paid $7.65 and you employer paid another $7.65 for a total of $15.30 sent to Uncle Sam.
And that doesn’t even count income tax withholding!
Guess what? When you start your own business you get to be the employee AND the employer.
You see where this is going? You pay both halves of FICA… only now they call it “Self Employment Tax”. And it applies to all of your business profits, regardless of how much you pay yourself.
If you have $100 of profit in your business, $14.13 goes toward S/E Tax. (It’s a little lower than $15.30 because the employer portion is a deductible expense — whoopie!!!)
Let’s pretend you went out on your own in January or February to start your business. You do well and clear $100,000 of profit and wisely set aside $20,000 to pay Federal and State taxes.
But you didn’t think about S/E Taxes.
Uncle Sam says, “That’ll be another $14,130 please.”
I’m sorry if you’ve ever been in that position. I’ve seen it happen dozens of times and it’s always heartbreaking.
BUT…
There’s an option available to many self employed business owners to slash the amout of their self employment tax burden.
An “S-Corp Election” allows your business to be taxed as an S Corporation instead of as a Sole Proprietorship.
Who cares?
Well, you should care, because S Corps don’t pay FICA or Self Employment Tax on their profits.
Wait. Wut?
That’s right, but before you get way too excited, they do still have to pay the owner/employee a “reasonable compensation” that IS subject to FICA.
But let’s say the business with $100,000 of profit pays it’s owner/employee a reasonable salary of $50,000…
After taking into account the changes in Federal and State taxes, this business owner is looking at about $4,000 of lower taxes BECAUSE the other $50,000 of profit in the business ISN’T subject to Self Employment / FICA taxes!!!
It gets complicated, unfortunately, because “reasonable compensation” has to be established and other factors can affect the outcome, like:
- State Taxes
- Filing Status
- Line of Business