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Posted: 7/3/2002 12:52:27 PM EDT
got a question for you: roughly speaking, how much do you pay in taxes each year percentage-wise? i know these things: 1) taxes are figured on NET PROFIT, not gross income 2) in addition to the infamous tax brackets, self-employed also fork over the full 15% self-employment tax (instead of the 7% split with employer for social security) i guess my question is this: are the income tax and the self-employment tax additive, meaning 15% plus my income tax bracket and viola! i have my total percentage? meaning i could pay as more than 50% of my NET PROFITS in taxes? yikes! why would anyone want to be self-employed? what was i thinking?
Link Posted: 7/3/2002 1:25:48 PM EDT
Employees and the self employed pay the exact same. You don't think your employer REALLY pays half of your FICA do you? There is also a kick back on PART of the "self employment tax" so you might say you pay less!
Link Posted: 7/3/2002 1:27:10 PM EDT
You were thinking you were tired of the corporate rat race.... Tired of the fact that someone holds your "job" in their hands and can at a whim eliminate it. Tired of the fact that regardless of how well you do at your job, someone can just decide they don't like you or how you do it and then just pull the plug. Tired of lining other's pockets through your sweat and blood. So, I think you have to weigh the costs against such intangibles as those mentioned above. I, personally, plan to take the plunge into the self employed world very soon. I'm going to start with a small gun dealing business and hopefully have an established business some day. I told a friend I planned to do it about a month ago, and two people have called me to look for firearms for them...I had to tell em I didn't have my FFL yet.... Hang in there ARLady, it'll come around Get a good CPA and maybe a tax shelter.... Cheers and Happy 4th Coz
Link Posted: 7/3/2002 1:33:57 PM EDT
Originally Posted By ARLady: got a question for you: roughly speaking, how much do you pay in taxes each year percentage-wise? i know these things: 1) taxes are figured on NET PROFIT, not gross income 2) in addition to the infamous tax brackets, self-employed also fork over the full 15% self-employment tax (instead of the 7% split with employer for social security) i guess my question is this: are the income tax and the self-employment tax additive, meaning 15% plus my income tax bracket and viola! i have my total percentage? meaning i could pay as more than 50% of my NET PROFITS in taxes? yikes! why would anyone want to be self-employed? what was i thinking?
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We paid almost 26% of our gross income in state and local income taxes. It would have been a bit higher if we would not have been given some really good small business tax advice. The difference between W-2 and self-employed was the amount and type of deductions avaiable. Bottom line, I will never work for anyone else again!
Link Posted: 7/3/2002 1:39:12 PM EDT
I can tell you that I pay too much. That said, if a business is profitable you can open a SEP IRA. You have to take a large salary to make it work, but you can take 15% of your gross payroll off the bottom line for you and your employees and invest in whatever you want. Like the man said, get a good CPA!
Link Posted: 7/3/2002 2:26:07 PM EDT
[Last Edit: 7/3/2002 2:27:21 PM EDT by Sweep]
Link Posted: 7/3/2002 5:25:01 PM EDT
Originally Posted By MickeyMouse: Employees and the self employed pay the exact same. You don't think your employer REALLY pays half of your FICA do you? There is also a kick back on PART of the "self employment tax" so you might say you pay less!
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well, actually, yes, they do, but employees earn lower salaries because of it. like they earn lower salaries because of paid benefits. i appreciate the sarcasm, but i was really looking for some numbers to help determine what to set aside from the income to pay the tax man on time. (i already know it's too much!) i don't have any inventory, and very little business equipment, so my situation is a fairly simple one as these things go. does anybody have any suggestions for websites that help sort out the mess or books that help shelter the taxable income? i don't mind paying for some things, but i'll be damned if puff daschle is going to play robin hood with my money and punish me for living the american dream. arrrrghhhh!
Link Posted: 7/3/2002 5:33:25 PM EDT
ARLady, My wife echos your sentiment. It sucks big time. I cannot advise what percentage that you should keep back to pay the IRS and your state. All I can do is let you know that we typically put away 35% for taxes and sometimes put back 50% to cover taxes and our SEP retirement program.
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