I started affiliate marketing at the end of 08 so 09 is the first year I'll have ever paid taxes in my life. I met with a CPA a few days ago and she said I'm in the 40% tax bracket (25% tax plus 15% social security) which is a shitload higher than I thought. Are most people here paying at least that? Are there any ways to get out of paying some of it or to write off things that aren't really business expenses but that you could reasonably say they were? I'm not looking forward to losing almost half my profits so the government can just give them away to lazy fucking idiots on welfare.
Tax
- Thread starter o hai guyz
- Start date
Self-Employment Tax
You can deduct 1/2 of that self employment tax. And it's only applicable to the first $100k or so. And in some cases, an s-corp structure can reduce your tax burden. Talk those over with your cpa.
You can deduct 1/2 of that self employment tax. And it's only applicable to the first $100k or so. And in some cases, an s-corp structure can reduce your tax burden. Talk those over with your cpa.
Taxes fucking rule. Between Federal and State tax, I pay almost $800 per paycheck at work, and then pay taxes on my affiliate/consulting income. Thank God we are still in Iraq. I am probably buying some really nice books for some poor kid over there. I can't think of a better way to spend my hard earned money.
Hello friend,
Have pay 40% tax sound like lot. Are you making million dollars profit?
You live in America? Maybe tax so high because government need money to give to bank to pay billion dollar bonus money to executives.
Good luck bro
Have pay 40% tax sound like lot. Are you making million dollars profit?
You live in America? Maybe tax so high because government need money to give to bank to pay billion dollar bonus money to executives.
Good luck bro
can anyone elaborate what does ^^ means ? i hardly could understand those rhymes like sentence
In the US, set up legally, yes you can expect to pay that much, more if you live in a state like California.
Talk with your CPA about it, dont listen to anything you read on here. Chances are you can write off a lot of your expenses from the year. Computers, office space, even cars, etc if you're set up correctly. But again, talk to an accountant about that, not Wickedfire members.
No one does, it's painful. But it's better than getting audited and fucked for not paying them. Suck it up and pay this year and then get a solid corporate structure set up in place for 2010.
I looked into an LLC but if I'm the owner and the only person in the company isn't it about the same? I'm in Texas.
I'm in the US. What's Club Monaco?
Thanks, I'll look into that.
You need to make sure everything you spend your money on IS a business expense.
My honeymoon? It was a board meeting for my corporation. When we rode mountain bikes down a volcano, it was for team building.
The night we dropped a few hundred on dinner? That was to reward my top salesperson. I happened to be married to her, but that's irrelevant.
Christmas presents to family? Those are actually marketing pieces I used to help spread awareness of my business.
You smell what I'm cookin'?
Dwight, you be cookin up an AUDIT OMELET! Don't skimp on too much cheddar, ya hurd?
Don't you know that you bust your ass so that you can feed other worthless fucks? That's my motivation - feeding/caring for cumstains that are fuckin lazy/worthless, or ensuring that my executives have their bills covered, or taking care of another international crisis.
Barack is gonna be sniffin up everyone's pant leg lookin for all the money he can find to cover all the borrowing/fake money printing he has pledged to his wallstreet cronies and international relations
GOOD
FUCKIN
LUCK
BROOOOOOOOS
Don't you know that you bust your ass so that you can feed other worthless fucks? That's my motivation - feeding/caring for cumstains that are fuckin lazy/worthless, or ensuring that my executives have their bills covered, or taking care of another international crisis.
Barack is gonna be sniffin up everyone's pant leg lookin for all the money he can find to cover all the borrowing/fake money printing he has pledged to his wallstreet cronies and international relations
GOOD
FUCKIN
LUCK
BROOOOOOOOS
Cheers for not being an American! Might as well get some of the benefits, already get fucked on most other things.
Get a CPA before you do any of this.
Taxes 101:
1.) Form an S-Corp
2.) Pay yourself as a W2 employee for your work. Specifically, pay yourself the LEAST amount of money that you could hire someone to do your job legitimately.
3.) Get a lawyer. Write a lease to yourself for any home office space or whatever you can justify. Lease income is taxed MUCH lower than regular income. Charge your S-Corp the HIGHEST amount you can get away with for that lease. If it means you have to buy an office building to do so - well, trust me, it's worth it. We may pay off our building this year...
4.) Expense whatever you can of course - BUT - do NOT try to get the company to pay for a car for you unless you are delivering pizzas. The IRS uses that as a HUGE red flag.
5.) Determine your average costs for a quarter. At the end of each quarter take out all money besides operating costs for the next quarter as a shareholder distribution.
6.) If you do need to buy a car or something expensive AND you own a home with equity do this:
a)Take out a home equity loan
b) Pay the money into the business as "Paid in Capital" or as a loan
c) Buy shit
d) Expense loan interest as a tax deduction
e) Charge yourself interest paying the money back if you did a loan, or next time you take distributions your basis will make that money tax-free.
Taxes 101:
1.) Form an S-Corp
2.) Pay yourself as a W2 employee for your work. Specifically, pay yourself the LEAST amount of money that you could hire someone to do your job legitimately.
3.) Get a lawyer. Write a lease to yourself for any home office space or whatever you can justify. Lease income is taxed MUCH lower than regular income. Charge your S-Corp the HIGHEST amount you can get away with for that lease. If it means you have to buy an office building to do so - well, trust me, it's worth it. We may pay off our building this year...
4.) Expense whatever you can of course - BUT - do NOT try to get the company to pay for a car for you unless you are delivering pizzas. The IRS uses that as a HUGE red flag.
5.) Determine your average costs for a quarter. At the end of each quarter take out all money besides operating costs for the next quarter as a shareholder distribution.
6.) If you do need to buy a car or something expensive AND you own a home with equity do this:
a)Take out a home equity loan
b) Pay the money into the business as "Paid in Capital" or as a loan
c) Buy shit
d) Expense loan interest as a tax deduction
e) Charge yourself interest paying the money back if you did a loan, or next time you take distributions your basis will make that money tax-free.
^^This
And what Sharksfan said is good info too.
I got several PM's about this topic. I'm heading out right now but will answer all of them tonight when I get back.
well honestly i got fcked over with the socialism tax last year + a $200 penalty on turbo tax because i made 0 money the year before. i am going to get fcked for 2009 as well. for this next year i have set up s corp and am paying myself min wage (15k yr) and will be paying the rest in dividends. the socialism tax is the absolute worse thing in the world. If i would not have a scorp i would be losing about 1/4 of a million dollars in my life even AFTER all the benefits if they are ever paid. keep in mind there is 0 legal obligation for you to get anything from social security. but now i will only pay maybe $2k/yr in social security instead of ~20k
As someone that interned briefly for the IRS, HOLY SHIT YOU WILL GET FUCKED, it's not a matter of if it's a matter of when. None of that would hold up in the IRS's eyes and you would get your ass handed to you trying to defend any of it in court. Just because you come up with some flimsy excuse that relates to your business it's not going to fly. There is a good one where a CPA tries to expense his Yacht because he put a big banner on the side advertising his company.
If your company is just a few people deducting anything above 1% of your revenue of obvious entertainment expenses is a great way to get audited and raped.
My company has 3 owners/employees: me, my best friend and my dad. When we play golf together we'd love to expense it as business specially since half of what we talk about IS business. I know from personal experience though that it's just a sure fire way to get audited.
This isn't the 70/80s anymore the IRS is REALLY cracking down on small business owners trying to deduct everything they can.
It sucks to have a big tax bill but fraud is not a great alternative IMHO
My understanding of how the IRS operates when they find an issue and then audit is this:
People hiding income and not paying taxes = Prison, involuntary butt sex with Bubba
People deducting non-legitimate items - definitely a fine, possibly some jail time
People who have errors or omissions - Small fine
People hiding income and not paying taxes = Prison, involuntary butt sex with Bubba
People deducting non-legitimate items - definitely a fine, possibly some jail time
People who have errors or omissions - Small fine
^^ That sums it up pretty good. One big thing that you didn't mention though is you are still on the hook for the taxes+interest in addition to the fine and it's a bill that will not go away in bankruptcy. Many small business owners in the last 10 years have been audited and found to owe 7 figures in back taxes for many years in the past. They don't send you to prison they just make sure that pretty much no matter what you earn you will be living on peanuts. Also if you stop working because you feel what's the point then they take you back to court and send you to jail if they can convince the judge you aren't working on purpose.