Your Self Employed Hidden Paycheck – How to Pay Yourself More with Less (Part 1)
As self employed, we're pulled in two directions. We want better income from being self employed, yet we want our self employed taxes to be as low as practical. We want our families to benefit from having a better income and all the luxuries it can buy: travel, TVs, cell phones, dining out, and more. But the more dollars in your paycheck, the more self employed taxes you pay.
Fortunately, there are common regular and necessary expenses in your business that have direct benefit to your family. The average employee must pay for all these items AFTER he gets his paycheck. Being self employed, you can count these items against your business and pay for them BEFORE you take your paycheck. Your self employed income will seem lower but your family gets ‘paid' in the stuff the business pays for, building your hidden paycheck.
This hidden paycheck is part of what makes being self employed worth the effort. Many items in our daily lives are also used for business. For the purposes of tax reporting, we get to take those expenses against the business because they are necessary for running the business. Depending on your business, this adds up to a hidden paycheck of $15,000 to $25,000 a year.
Your CPA can help you figure out exactly which costs fall into the various buckets and where to report them on your tax forms. Let's go over some examples. Better income from your hidden paycheck comes from:
I'll go into detail in part 2, here are just some totals. Last year, my hidden paycheck amounted to $23,606. I'll show you how I got there in Your Self Employed Hidden Paycheck - Little Things Add Up (Part 2)
Here are the categories I used:
Self employed health insurance
Cell phone
Home/business phone
Internet
Lunches/dinners out
Party leftovers
Travel
Vacation
Home office deduction
Per diem meals
Office supplies
Auto mileage
Computer equipment
Telephone equipment
What's in your self employed hidden paycheck? Call me.
Your Self Employed Hidden Paycheck How to Pay Yourself More with Less Part 1 - To learn more about this author, visit Merra Lee Moffitt's Website.
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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