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I loaded my business down with expenses such as hosting costs, office supplies, advertising (adwords), consulting, and entertainment (hitting the pub counts right?). It brought my profits down by 30%.
Keeping my fingers crossed.
Have the company pay for everything. You want profits to be low. You want the company to be poor.
Secondly the extra self-employemnt taxes are somewhat deductable as a sole-proprietor and not as both an employer and employee.
there may be other reasons to "go dorporate" but I don't understand this rationale.
We've been set up this way for four years and save on taxes every year. It's the whole point of an S corp. You'd want an accountant to do your first filing (due March 15, not April 15), but then Turbo Tax can do it.
joined:Dec 29, 2003
until IRS nails you for not taking enough $$ as salary. Talk to an accountant first
Yes, you have to pay yourself a legitimate salary. You can't pay yourself $5,000 and take $50,000 in distributions. Generally, the salary should be more than half of the profits to keep the IRS happy. The salary is also deductible.
Yes, talk to an accountant first, but S corps are the fastest growing business entity in the U.S.
joined:Dec 29, 2003
It used to be the Dems who were doing the SS scare routine (remember the lockbox campaign issue just 5 years ago?), then GWB co-opted the issue and tried to scare everyone that it will be bankrupt.
Technically if nothing is done, income will be less than promised payments. But something can ALWAYS be done.
First off, if we were to do absolutely nothing, a reduction in benefits to 75% of current promises makes the program revenue neutral for the forseeable future. That's not what you have in mind when they say "bankrupt" now, is it?
If we just wanted to raise taxes, we'd need to have a 25% tax just for Medicare! Scarey, right? Well, not when you realize that we're already paying about 15%. So it would be a 10% increas in taxes on all. Not too fun, but not exactly "bankrupt", is it?
OK, so we need to fix it. How?
Raise taxes by 10%?
Cut benefits by 25%?
Some combination thereof?
How could you cut benefits by 25%? How about delaying retirement age by 3 years? I don't know the exact numebrs but 3 more years of payments and three fewer years of withdrawals would seem to me to be close to 25% percent of benefits, without reducing anyone's monthly payment, although it clearly would be delayed by some amount. After all, we're in this problem because people are living longer and having much longer retirements than ever thought possible even just 20 years ago.
If we do it now, we can phase in the increase in retirement age (it's already been raised, sort of, to 67 from 65) over time, so people close to retirement don't have to wait but a few extra months, but youngsters in their 30's might see a 3 year increase, and 40's may see a two year increase and 50's a one year wait.
If we wait, there's gonna be a lot of VERY unhappy seniors at some point. But it's not "Bankrupt".
That said, I don't trust politicians to do the right or sensible thing, and the REAL problem is the rest of the governments fiscal deficits, so I have an old 401(k) or two, I have SS qualification, I have savings, I have real estate, I have life insurance and long term disability policies, I have some stocks, an IRA or two, and AdSense, too :D.
Just my thoughts on it.
There isn't going to be any Social Security down the road
Lessee, is that because you believe that all the U.S. workers will be dead? Or did you just not understand the most basic fact about Social Security, that benefits are paid for by taxes on whomever is working right now?
Listen to Walkman!
The Self Employed are currently being handed out lots of freebies via the tax code. If you don't take them right now then more fool you. I personally hate retirement plans for numerous reasons (mainly I have to admit I'm getting old), but, they are great tax incentives for SEP's at this time, so bite the bullet and live with it ;)