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Your Self Employed Hidden Paycheck – How to Pay Yourself More with Less (Part 1)

Written by: Merra Lee Moffitt

Article Overview: You get a hidden paycheck from being self employed! There are numerous things that your family gets huge benefit from that the business needs and pays for. And you also get the small business tax deductions, too! Check it out and increase your own hidden paycheck.

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.

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Article Tags: buckets, business phone, computer equipment, cpa, employed health insurance, health insurance, hidden paycheck, home business, home office deduction, leftovers, luxuries, mileage, necessary expenses, office supplies, self employed health, self employed health insurance, self employed taxes, tax forms, telephone equipment, tvs



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Young Entrepreneur - I'm fifteen and last year, when I was fourteen I owned a motor sports marketing company. So yes, I do feel last year I was a "Young CEO." This year I'm getting more involved in investing. I assume I am now a "young investor." And for everyone's reference, there are four types of people in this world: 1.)The Employed 2.) The Self Employed 3.) Business Owners 4.) Investors The difference between the self employed and business owners is that business owners can leave their company for one year and come back and find that it is more profitable than when he/she left. A self employed person is like a Doctor or Dentist.
Re: Ways to Boost Productivity - 1. Give Employees More Than a Paycheck 2. Provide Better eSupport Channels to Promote Self-Service 3. Complete your most dreaded tasks first thing in the morning. 4. Outsource as much as possible 5. . Turn off the TV.
Re: Books for the Entrepreneur - I like "A Whole New Mind" by Daniel Pink, and "Predictably Irrational: The Hidden Forces that Shape our Decisions" by Dan Ariely.
Re: Books for Business Owners - Hi DougSchadle, Thanks for sharing your favorite business book with us! A good book I'm reading now is "Maximum Achievement: Strategies and Skills That Will Unlock Your Hidden Powers to Succeed" by Brian Tracy as it was a birthday gift from a friend. Tracy's book is helpful in identifying what's important in your life and then setting an action plan to achieve it.
Patent information - I'm also interested in Part 2. Thanks.


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