Self-employed get the shaft again. (myth, examples, money, claim)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
How many that are "self-employed" keep an eye on their income and tax brackets?
Come the fall, you start calculating to see what is where and do we need to spend to lower our tax bill.
Have you ever come to the point that around October-November, if you make any more money, you actually lose money. It puts you into the next tax bracket?
Do you keep working and take the loss and work that last 2 months for nothing in return, other than to keep your clients happy?
When I was blowing & going as a youngster I didn't pay attention, but today I just stop all business and income and go to the woods to get things ready for deer season.
Have you looked at tax brackets and noticed you are just on the other side of the higher bracket?
If you took a cut in pay to get you below the LINE, you would actually have more disposable income.
Aren't your taxes done on a cash, rather than on an accrual basis? If so, anything billed but not collected isn't taxable income. If not, why not? As a small business owner, talk to your accountant about doing your taxes on a cash basis.
So if your customers or clients pay net 30 days, any business you conduct in December isn't an issue. If a project takes a few weeks to complete, any work you start mid-November, isn't an issue. You get done the first week in December, bill the customer and they pay in January. Plus you get to use the expenses for the sale in the current year.
I'm not sure what your business does. If it's service related, or you don't expect automatic payment for goods, you shouldn't need to stop what you're doing for two full months.
How many that are "self-employed" keep an eye on their income and tax brackets?
Come the fall, you start calculating to see what is where and do we need to spend to lower our tax bill.
Have you ever come to the point that around October-November, if you make any more money, you actually lose money. It puts you into the next tax bracket?
Do you keep working and take the loss and work that last 2 months for nothing in return, other than to keep your clients happy?
When I was blowing & going as a youngster I didn't pay attention, but today I just stop all business and income and go to the woods to get things ready for deer season.
The only money taxed in the higher bracket is the money EARNED in that bracket. All of your earnings to date are not recalculated.
May I suggest getting a CPA, running a business is hard work, but trying to do the work of a CPA on top of running a business is just crazy, of course taking two months off from a business seems like an even worse idea unless the business is something like Landscaping, and even then those guys tend to have something else they do in the winter months.
May I suggest getting a CPA, running a business is hard work, but trying to do the work of a CPA on top of running a business is just crazy, of course taking two months off from a business seems like an even worse idea unless the business is something like Landscaping, and even then those guys tend to have something else they do in the winter months.
I did have a CPA. He is the one that would let me know I was getting close to the next tax bracket and only a few months left in the physical year and projected income based upon history, if it was worth it.
My business was payment upon delivery or completion. No 30 day deal.
I did have a CPA. He is the one that would let me know I was getting close to the next tax bracket and only a few months left in the physical year and projected income based upon history, if it was worth it.
My business was payment upon delivery or completion. No 30 day deal.
Well then what's the problem? Your CPA gives you tax advice, tells you that you are better off taking a couple months off, so you take a couple months off. Maybe next year you try to earn more money in the first half of the year to put you into that higher tax bracket earlier so you don't have to concern yourself about it because you will already be making more.
Since you claim to have a CPA, they should already know this, that also means you should already know this. Your whole income isn't being taxed at a higher rate, only the amount you earn that is in that higher tax break. Maybe you can sit down with your CPA to figure out what additional things you can claim as a write off to help reduce your income on paper if that is a concern for you.
Though even at a higher tax bracket during those last two months, you should still make a profit unless your business doesn't have that high of a return for you, which in that case, maybe you want to spend those two months off thinking about how you can improve your business to make it more profitable.
Most self employed do their taxes quarterly. The tax rate never goes to 100%, so it never makes sense to stop working. There is always a profit to be made. Plus, you aren't considering keeping the money in the business and not paying out. Just save up the money and take more out a year when my income is lower. That evens out the tax rate over time. Businesses do have disadvantges, but we also have advantages. We just have to be smarter about it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.