Everyone loves to get a good deal and with this next money saving tax strategy, you’re sure to save beyond what you hoped!
Sole Proprietors, 1099’s & LLC’s generally pay higher taxes because they are now responsible for 15% self-employment tax. When you work for someone else, they withhold 7.5% from your paycheck for social security and medicare. Then they match this 7.5% & send 15% to the government. When you become self employed or create any type of 1099 income, you are now responsible for this 15% tax ON TOP OF your regular federal income tax!
During the first year of business this can really take a lot of people by surprise when they end up with a huge tax bill they didn’t plan for! This is another reason why having a money & tax plan is SO important for your business!
There is a special election that you can take which allows you to save on these self employment taxes. This can potentially be thousands of dollars every year (depending on your income). Plus, there are dozens of other tax strategies you can implement as well!
This special election can save you a ton; however, there are very STRICT guidelines that you must follow in order to keep this special election, but it can save you literally thousands of dollars a year (especially if you are already earning a decent income). If you are only making a few hundred dollars a month, it probably isn’t going to help you.
Business owners who only think of their accountants in terms of taxes miss out on utilizing them as a trusted advisor and someone who can help grow the business by utilizing strategic tax planning. Don’t overlook the value of us for your business!
Don’t miss saving thousands of dollars by not incorporating strategic tax planning into your business! If your accountant hasn’t offered you any money saving tax strategies or you are doing your taxes yourself, schedule a free tax review with me today!