RE: Anyone ever heard of this book or program

["Russ Seligman" <rseligman -at- enkata -dot- com>]

>Russ, you overlooked Janet's step 1: "Incorporate yourself." She's not
talking about
>being self-employed (1099) or being an employee of an agency. She's
talking about
>being an employee of _a company you own_.

Ah, yes, I did miss the implications of that first step. My comments
were relevant to being a 1099 independent contractor. So when it comes
to incorporating yourself, I'll defer to those with experience in the
matter.

Thanks, Richard, for identifying the crossed signals.

--Russ


-----Original Message-----
From: bounce-techwr-l-115379 -at- lists -dot- raycomm -dot- com
[mailto:bounce-techwr-l-115379 -at- lists -dot- raycomm -dot- com] On Behalf Of Richard
G. Combs
Sent: Wednesday, November 13, 2002 2:49 PM
To: TECHWR-L
Subject: Re: Anyone ever heard of this book or program



In response to Janet Murphy's 10-step program, Russ Seligman wrote:

> >3. Find a good small business-focused tax accountant so you only have

> >to minimally worry about the tax end. 4. Hire a payroll service so 
> >you don't have to mess w/payroll taxes.
>
> Or, if you do #3, then don't bother with #4 and save the fees you'd 
> otherwise have to pay the payroll service.  Doing both is like saying,

> "I want to pay someone else to deduct taxes from my paycheck instead 
> of doing it myself."  If you are disciplined enough to tuck away about

> 45% of your gross income for taxes, then there's no reason to pay 
> someone else to do it for you.  <snip>
>
> Just remember that the money you receive as a 1099 employee (that is, 
> an independent contractor) does not have any taxes withheld, so  
> <snip>
>
> As an independent contractor, you also have tax deductions available 
> for business expenses, travel between your home and the client, 
> medical expenses, and more (all subject to additional limitations). I 
> don't believe you can claim these if you're "employed" by a payroll 
> service.

Russ, you overlooked Janet's step 1: "Incorporate yourself." She's not
talking about being self-employed (1099) or being an employee of an
agency. She's talking about being an employee of _a company you own_.
The payroll service is just someone your company contracts with to
provide payroll-related bookkeeping services; you don't work for _them_,
they work for _you_ (well, for your company). :-)

Janet's step 1 is an excellent idea, BTW. An S corp. works well for most
people, but other options such as an LLC or PC may be possible. A
corporate entity gives you at least three advantages over being a
self-employed
individual:

-- A more professional image and greater credibility/acceptance. Some
companies that won't directly contract with an individual will contract
with your company for your services.

-- Payroll tax savings. If you net $80k of self-employment income, you
pay payroll taxes (SS/Medicare) of 14.3% on all of it -- over $11k. If
your corporation nets $80k, it can pay you, say, $50k salary; the
remaining $30k is profit to the stockholders -- that's you. But you
don't pay payroll taxes on the profit distribution, only on the salary.
So you save 14.3% of $30k -- over $4k.

-- Free pens and stuff. You'd be amazed how many companies will send you
free samples of pens, calendars, day planners, etc., personalized with
your company name, in the hope that you'll order a few thousand as
marketing tools. :-)

Richard


------
Richard G. Combs
Senior Technical Writer
Voyant Technologies, Inc.
richardDOTcombs AT voyanttechDOTcom
303-223-5111
------
rgcombs AT freeDASHmarketDOTnet
303-777-0436
------



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