The wonderful life of self-employment includes many things including autonomy, ability to earn as much money as you want, self-sufficiency and the feeling of accomplishment that comes with creating something.
I have owned my own firm for 12 years and every year there is a new challenge. In the first years it was how to get all this work done. The next years was how to hire help and when. My business is not exempt to the normal growth spurts and challenges that all businesses go through. Taxes and how to structure for them has always been a top priority.
One of the biggest questions I get asked is……. How much tax am I going to have to pay for myself and employees?
This is a BIG issue. If you don’t know what you want to earn and how that equates to your taxes you are in the dark. Check out this Lifestyle Calculator so you know what to expect in taxes. This calculator works best if you still file your taxes on your 1040 as a Schedule C filer.
The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
As an employer this means for every payroll dollar you pay an employee you put away .0742 cents and send to the social security administration. For example, if your payroll is $200,000 per year. Your payroll tax liability is $14,840. This can definitely add up.
There are more hidden fees such as Arizona State Unemployment and the Federal Unemployment rate as well as workers compensation insurance. This the minimum that most employers must pay.
If you add benefits you may be paying 10-15% more that you expected when you hire your first employee’s. Its shocking!
Another question I always get is when do I need to hire a CPA?
As you can see your taxes can rack up quickly…. I believe that a CPA is always going to be worth the investment and such a smart business move. See my link on how to hire a Super CPA. I have heard every excuse not to hire a CPA you can imagine. Excuses.
For a small fee you can gain the peace of mind so many people are forgoing. Personally, I think investing in your business and utilizing specialists for good solid advice will always save time and money. I also, don’t know what I don’t know. You pay people for experience and knowledge especially if you have neither. A little investment can go along way.
Is your business accounting in the best hands possible? Let’s chat to see if your current direction is optimal for your business. From the comfort of your office or home, let’s connect virtually or by phone, risk-free and no obligation.
To make it easy for you, please just click on the link to schedule it: https://gmlcpa.youcanbook.me.
If your preferred time is already filled just call our office at 520.572.1248. We will be happy to help.
I am looking forward to chatting with you about your accounting needs.