What? My crappy Capital One 284% APR Credit Card isn't good enough?

DoubleActionCHL

Well-Known
Jun 23, 2008
1,572
36
Spring, Texas
+1!

Any other Dave Ramsey fans here? "Cash is king, and debt is dumb".
Absolutely! I'm down to my mortgage and a few thousand on one vehicle. Everything else is paid for. I have one credit card for emergencies; usually a zero balance.

Now, if I could just keep up with Uncle Sam! Self-Employment tax is killing me!
 

brainiac

Member
Mar 7, 2008
175
16
Parker County
Absolutely! I'm down to my mortgage and a few thousand on one vehicle. Everything else is paid for. I have one credit card for emergencies; usually a zero balance.
Good deal! I'm on Baby Step #6, with only my mortgage left and will have that gone in less than two years.

Now, if I could just keep up with Uncle Sam! Self-Employment tax is killing me!
You should look into incorporating. I'm self-employed also and being incorporated has saved me a TON in taxes. You need to find a CPA that really understands small corporations and self-employment though.
 

DoubleActionCHL

Well-Known
Jun 23, 2008
1,572
36
Spring, Texas
Good deal! I'm on Baby Step #6, with only my mortgage left and will have that gone in less than two years.



You should look into incorporating. I'm self-employed also and being incorporated has saved me a TON in taxes. You need to find a CPA that really understands small corporations and self-employment though.
I've considered that, but my CPA told me that it would open me up to personal property tax, corporate franchise tax, state business income tax, etc. He seemed to think it would be close to a wash, but more paperwork with the corp. Agree or disagree?
 

brainiac

Member
Mar 7, 2008
175
16
Parker County
I've considered that, but my CPA told me that it would open me up to personal property tax, corporate franchise tax, state business income tax, etc. He seemed to think it would be close to a wash, but more paperwork with the corp. Agree or disagree?
Agree that it's a little more paperwork, but my CPA takes care of most of that for me.

Strongly disagree that it's close to a wash; it's way worth it to me but I guess it depends on your type of business.

The biggest advantage of a corporation is that it pays all its expenses before taxes, and whatever is left is profit and taxable (opposite to individuals, who must pay taxes first and then pay bills after). So the corporation can provide you and your family with many benefits using tax-free dollars, for example insurance. In my business I travel a fair amount, so all my travel is paid for by the corporation with untaxed dollars. I haven't taken a vacation in years, but my corporation has an annual meeting every year that all officers (my wife and I) are required to attend. Past annual meetings have been held in Steamboat Springs CO, Santa Fe NM, Charleston SC, Galveston Island, etc. Any expense that can legally be paid by the corporation is a deduction against profit for the corp., and money that you don't have to pay yourself and get taxed on. I am an independent contractor to my corporation, so I still get the Schedule C write-offs too. With a "C" Corp. you also get to choose your fiscal year; having a fiscal year different than your personal calendar tax year allows you play timing games of when you pay yourself from the corp. to defer taxes you can't get out of altogether (that year).

The basic idea is to have the small corp. spend as much of its money as possible and hence show little to no profit and to provide services and reimbursments to the contractor (you) that are not taxable or at least not all subject to self-employment tax (FICA and etc.). You can't get out of paying yourself taxable income completely, but you can greatly reduce what you are exposed to as a sole proprietor. Again, the key is to educate yourself but most importantly find a CPA that really understands self-employment and small corportations. Not all of them do.
 

SIG_Fiend

Administrator
TGT Supporter
Admin
Feb 21, 2008
7,128
48
Austin, TX
Being previously self employed and having to deal with that tax, I'll say this much. Don't go to H&R Block. THEY SUCK. I was new to the self employment thing and went there out of haste, but ended up getting screwed. They won't allow you to take nearly as many deductions as you should be able to. I will never trust tax accounting chain businesses like this again. ;)
 

50calRay

Active Member
Jun 17, 2008
210
16
blah
I need a new accountant!
A good CPA is worth his weight in Gold! I would seriuosly look into finding the best you can aford. It took us a while but we finnlay got us a good one our selves. Oh and as stated above, I wouldn't go to some H&R block chain place usless it was some part time job mowing yards during College. Anything else is going through an independent CPA/Group.
 
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