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Dave Said:

Small Business vs W-2?

We Answered:

The above answers are not 100% accurate as if you become a corporation, such as an S-Corp, your will end up having two tax returns to file, one for your personal income (the income your corp pays you either W-2, 1099, or as dividend) and your corporate tax returns. Expenses from your corp do NOT go on your schedule C of your personal return.

There are MANY advantages of being self employed or being incorporated. There are so many deductions you can write off being incorporated and also corporate dividends are not subject to FICA and Medicare so you can save 7.5% in personal taxes. However, as an employee of your own corporation, you end up paying the roughly 12-15% employer paid taxes yourself rather than being paid for the company you currently are W-2 by but that is only paid on the amount you set aside as wages paid to you. Right now, I think you said 100K is paid W-2 by the other company. 100k through being 1099 self employed or paid through a corp could end up being so watered down with expenses that could make your personal income down to almost nothing and you could possibly write off just about everything through your corp.... assuming you have expenses and a good tax consultant. For example, when I was W-2 for a company I was not able to write off the expenses for my H2 HUMMER. However, when I became incorporated, I put the HUMMER under the corporation and since it is considered a commercial vehicle over 6000 lbs, I was able to write off 100% of the expenses. That translated into roughly $1000 per month of a write off. If structured correctly and you actually have expenses that could be viewed as business related, there is a lot that can be written off under a business that you cannot write off under W-2. Even cable can be a legitimate business expense if it is needed to check the news regarding business, or weather if you travel, or for whatever reason you need to be "informed" of world events. I was in real estate so I was able to keep track of the stock market to have an idea of what rates could be expected to do. And since I also took clients to see properties, it was important to keep up on the weather forecast to best schedule appointments. There was $100 month write of for communication. LOL

The biggest thing to keep in mind is this.....you start out with $100k as W-2 and you get taxed on $100k (or in your case I think you mentioned it gets down to $80k actaully taxed).

What you have to do is figure out what your paying in taxes now and what your net income is adding in the advantages of being W-2 such as do they provide health coverage, 401k or retirement package, etc. Then take the $100k and run it through what you will be able to "write off" as expenses. After which you will have dividend (if incorporated) and profit and loss from business if self employed (make sure you factor in self employment tax 15% if you go self employed), also factor in the employer taxes you have to pay if you incorporate and pay yourself W-2 wages.... and then compare the bottom lines. For some being W-2 has more advantages..... for me, my employer was not generous and did not provide many benefits so I was not losing much by making him a "client". And I also did go out and get more clients so I was not soley working for just one employer any longer.

The truth is..... this is a very complicated question and it takes a tax consultant to review your individual circumstances to actually provide an accurate answer specific for you.

Marcus Said:

Help on my landscaping and construction business plan i need answers under each topic please help asap.?

We Answered:

Thats alot try posting one question at a time.
I do know that word of mouth is the beat way to advertise. Canvassing close neiborhoods door to door offering your services (not being too pushy or passive) can be very effective if you do it wel. "Hi, sorry to bother you. I'm just stopping by advertising for landscaping co. that is currently working in your neiborhood..." Have a flyer with standard prices, offer free estimates. "...and if you schedule today you get ____ for free!

Good luck

Benjamin Said:

Why does Rush Limbaugh compare Health Care Reform to Rape?

We Answered:

WAKE UP AMERICA IF YOU HAVE HEALTH INSURANCE OR NOT, AND/OR GO TO THE DOCTOR OR HOSPITAL YOU ARE ALREADY PAYING FOR THOSE WHO DO NOT PAY BECAUSE OF NO INSURANCE AND NO MONEY!!!
When a person shoplifts the loss has to be paid by someone, usually the consumer. When a person receives medical care it has to be paid for also therefore those that do pay pay for all.

WE NEED TO FIX HEALTH CARE IN THIS COUNTRY

as far as limbaugh is concerned it is the Oxycontin talking.

Eddie Said:

How will the Senate healthcare bill "make preventative care completely free"?? What is the WH talking about?

We Answered:

Nothing in life is free. When the WH starts talking about "completely free" what they mean is, "we'll force somebody ELSE to pay for it!"

Stella Said:

If the current system is so great, why are so many small businesses dropping healthcare coverage?

We Answered:

Because they are brining in less money due to the economy...not because they suddenly decided they didn't like the care.

I think we do need some kind of reform...but not whats in the works now.

edit. The economic down fall began last year, smart guy. It hit some company's sooner than others. Um, where did I say the economy was fine last year?

A smart business owner takes action before it's too late, yes.