Comments on: Ask the cubicle expat: Should I become an LLC? http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/ Practical Career Advice for Women Who Think Outside the Cube Thu, 23 Aug 2012 04:20:02 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: stephen http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/comment-page-1/#comment-10813 stephen Mon, 30 Apr 2007 10:07:28 +0000 http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/#comment-10813 I don't see how its considered self employment TAX! I don’t see how its considered self employment TAX!

]]> By: Michelle Goodman http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/comment-page-1/#comment-3264 Michelle Goodman Sun, 18 Feb 2007 08:44:06 +0000 http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/#comment-3264 yes, the IRS calls the combination of your social security tax and medicare tax a "self-employment tax" when you're a sole proprietor. BUT if you are someone's employee, you would be paying half that -- approx 7.5% of your income -- anyway. so the difference is that you now pay the employee AND employer halves of your social security tax and medicare tax, since you are now both employer and employee. the increase in tax payment is actually 7.5% (or so), not 15%. going the LLC route isn't going to get you out of paying these taxes. you'll just pay them in a slightly different way given the legalities of your business structure. to make up for paying an additional 7.5% in annual income tax (the self-employment tax SM refers to), sole proprietors deduct business expenses and charge more per hour than they did as employee. we also itemize and deduct all business expenses, bringing our profit margin down, and in turn, reducing the amount of taxable income we make. and IRA (retirement fund) can further help here. if you do all this in a financially savvy way (and with the help of a good accountant), the self-employment tax shouldn't be a big deal at all. yes, the IRS calls the combination of your social security tax and medicare tax a “self-employment tax” when you’re a sole proprietor. BUT if you are someone’s employee, you would be paying half that — approx 7.5% of your income — anyway. so the difference is that you now pay the employee AND employer halves of your social security tax and medicare tax, since you are now both employer and employee. the increase in tax payment is actually 7.5% (or so), not 15%.

going the LLC route isn’t going to get you out of paying these taxes. you’ll just pay them in a slightly different way given the legalities of your business structure.

to make up for paying an additional 7.5% in annual income tax (the self-employment tax SM refers to), sole proprietors deduct business expenses and charge more per hour than they did as employee. we also itemize and deduct all business expenses, bringing our profit margin down, and in turn, reducing the amount of taxable income we make. and IRA (retirement fund) can further help here.

if you do all this in a financially savvy way (and with the help of a good accountant), the self-employment tax shouldn’t be a big deal at all.

]]> By: SM http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/comment-page-1/#comment-3258 SM Sun, 18 Feb 2007 07:47:47 +0000 http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/#comment-3258 Know also that if you operate as a Sole Proprietor, you'll have to pay a 'self-employment tax' -- which is 15.4%!! I didn't LLC because I thought it was too expensive, but having to fork over an additional 15.4% (!!) to the IRS is definitely not cheaper! Know also that if you operate as a Sole Proprietor, you’ll have to pay a ‘self-employment tax’ — which is 15.4%!! I didn’t LLC because I thought it was too expensive, but having to fork over an additional 15.4% (!!) to the IRS is definitely not cheaper!

]]> By: Michelle Goodman http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/comment-page-1/#comment-2827 Michelle Goodman Wed, 14 Feb 2007 03:13:36 +0000 http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/#comment-2827 you're welcome! you’re welcome!

]]> By: kristen http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/comment-page-1/#comment-2806 kristen Tue, 13 Feb 2007 20:56:19 +0000 http://www.anti9to5guide.com/2007/02/13/ask-the-cubicle-expat-should-i-become-an-llc/#comment-2806 thanks so much!! thanks so much!!

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