| Author | Message | ||
     Blake |
Why do we so blatantly discourage self-employment? Social Security and Medicare taxes for 2010 | ||
| Ft_bstrd |
It's ok, we don't like corporations either. | ||
| Rocketsprink |
I don't like corporations being treated as individuals. "A collection of like minded individuals" is NOT an individual. I personally have no problem with corporations that treat their employees as human beings. I have a really big problem with foreign corporation being able to influence elections. Apparently you do not. Haven't the taxes always been higher on the self employed? Or is that new? | ||
| Jramsey |
No wonder I've always been broke.  | ||
| Cityxslicker |
on employer taxes... you forget that the employees that are working for that employer pay that difference. Self employed gets treated like a corporation.... dumbest damn thing out there, since everything else is on some kind of sliding schedule. Your way around it is to be a non profit, but then you have to meet the 501 3c regs, and have a board o trustees | ||
| Ft_bstrd |
"A collection of like minded individuals" is NOT an individual. Agreed. Please tell that to these folks:   If we are going to have the influence of organized labor, we should at least allow in their "opponent's" viewpoint. | ||
| Fahren |
All well and good to bash the unions now that we all have secured a modicum of fairness in the workplace. But I'm willing to bet a huge number of us on this board would be sweating 14 hour days 7 days a week in crap conditions in some shite job and dying young and sick, were it not for the efforts of labor unions in the early 20th century and the workers who joined them. Lest we forget. | ||
| Ft_bstrd |
I wasn't bashing unions. I was simply illustrating the inequity of the argument. Do you believe that unions should be able to buy influence and corporations not? | ||
| Iamike |
I have a really big problem with foreign corporation being able to influence elections This latest Supreme Court decision didn't say that (unless you read the leftist propaganda). I don't think that its right that the unions are allowed to always be one -sided. I argue with my union buddies that it is propaganda if they never say anything good about a Republican. Never say anything bad about a Democrat. Never endorse a Republican. Never endorse a Democrat. | ||
| Crusty |
I have a problem with foreign governments being able to influence elections. http://www.washingtonpost.com/wp-dyn/content/artic le/2010/01/08/AR2010010803710.html | ||
| Ferris_von_bueller |
Yea, Blake you're not taking into consideration that the company pays half of the SS tax and the employee pays the other half. Besides, there are many ways to set up a business. A owner of a company can set it up so that he/she is an employee of the corporation, which, among other things, qualifies the owner for unemployment compensation.....lol. | ||
| Ft_bstrd |
It doesn't matter whether you set up your business as a corporation or sole proprietorship. You will be paying the tax. The only way you don't pay the tax is when the corporate tax payor is different than the employee. In small businesses, both the corporate tax payor and the individual tax payor are the same person. | ||
| Ferris_von_bueller |
I did not mean to imply you won't be paying the tax but to point out that an owner has the option of being an employee of their company and thus being subject to all the guidelines, etc of an employee. I'm not sure what Blake's point is, anyway. The tax is still paid no matter how you slice it and I dont see where the penalty comes into play for being self-employed. I believe a better case for complaint can be made for all the regulations and taxes that businesses are burdened with making it difficult to compete, especially globally. | ||
| Ft_bstrd |
Oh, I agree. That was MY point. | ||
| 2008xb12scg |
Blake, I had no idea self employed had to pay more taxes, let alone double. That sucks. | ||
| Dentguy |
OR Instead of being a Sole proprietor (self employed) which also puts your personal assets at risk if you get sued for something work related, create your own "S" corporation (which will protect your personal assets) and pay yourself less every month if you can afford to. Let the company show a profit, then pay yourself dividends. You will have to pay State and Federal taxes on that profit which goes to your personal taxes. You will not have to pay Social Security and Medicare taxes on those dividends. Interest and dividends are not subject to those taxes. Not yet. Keep in mind that you still pay the employee portion and your company pays the company portion of the Social Security and Medicare taxes of your payroll which must be reasonable. You can't just pay yourself more dividends than payroll every year or Uncle Sam will come knocking. Just a thought. (Message edited by dentguy on January 31, 2010) | ||
| Dentguy |
Here is some other info about Self Employment Tax. "A tax similar to the FICA tax is imposed on the earnings of self-employed individuals, such as independent contractors and members of a partnership. This tax is imposed not by the Federal Insurance Contributions Act but instead by the Self-Employment Contributions Act of 1954, which is codified as Chapter 2 of Subtitle A of the Internal Revenue Code, 26 U.S.C. § 1401 through 26 U.S.C. § 1403 (the "SE Tax Act"). Under the SE Tax Act, self-employed people are responsible for the entire percentage of 15.3% (= 12.4% [Soc. Sec.] + 2.9% [Medicare]); however, the 15.3% multiplier is applied to 92.35% of the business's net earnings from self-employment, rather than 100% of the gross earnings; the difference, 7.65%, is half of the 15.3%, and makes the calculation fair in comparison to that of regular (non-self-employed) employees. It does this by adjusting for the fact that employees' 7.65% share of their SE tax is multiplied against a number (their gross income) that does not include the putative "employer's half" of the self-employment tax. In other words, it makes the calculation fair because employees don't get taxed on their employers' contribution of the second half of FICA, therefore self-employed people shouldn't get taxed on the second half of the self-employment tax. Similarly, self-employed people also deduct half of their self-employment tax (schedule SE) from their gross income on the way to arriving at their adjusted gross income (AGI). This levels the amount paid by self-employed persons in comparison to regular employees, who don't pay general income tax on their employers' contribution of the second half of FICA, just as they didn't pay FICA tax on it either." | ||
| Aptbldr |
Aren't Federal allowed deductions against income different for US self-employed compared to its wage slaves, err ... employees? Gov't subsidizes 'bout 50% of self-employment (business) expenses directly thru basic tax codes. Special loopholes may be purchased, contact your congressman. | ||
| Ft_bstrd |
There are some deductions available to corporations not available to individuals (interest on non-mortgage loans, deduction for certain benefits provided to employees). The tax brackets are also MUCH steeper as a percent of earners. $373,000 of earnings for a corporation is nothing. | ||
| Etennuly |
would be sweating 14 hour days 7 days a week in crap conditions in some shite job and dying young and sick, Funny.....you just described self employment in a down economy!  But you didn't mention for NO wages, or less, because making sure the employees and taxes get paid first is paramount to existing next month or next year and can often require loans in these times when customers cannot pay or pay late. Thus adding paid out interest to an already tight budget. My employees pay 6.2% SSI tax, I pay 6.2% SSI tax on his wages = 12.4% of gross wages paid out. My employees pay 1.45% Medicare tax, I pay 1.45% medicare tax on his wages = 2.9% of gross wages paid out. Their Federal Income tax is paid based on a Department of Treasury scaling schedule. One that I don't have to match. So if one of my employees is single, claiming "0" and his normal weekly earnings are $600.00, it goes like this; $600.00 wage - 69.00 Fed tax - 37.20 SSI tax - 8.70 Med tax =$485.10 His take home pay. I have to set aside(collect) his taxes of $114.90. Then I have to add to that the part I have to match $37.20 SSI and 8.70 Med. That total is now $160.80 that has to be paid into the gubmint for generating a $600.00 wage. Multiply that buy 4.3(avg weeks in a month) = $691.44 to the gubment for his average month, x12 months = $8297.28 annual tax paid in on this one employee. This one is single claiming "0", so the chances of having an overpayment will be based on his having deductions other than child credit. $2368.44 is the amount of tax that I, as an employer, have to pay of that $8297.28. That is $37.20 + 8.70 = $45.90, X 4.3(wks per mo avg)= $197.37 X 12(mo)= the $2368.44. Now if I do happen to post a profit I have to pay the 12.4% SSI and the 2.9% for Medicare on my wages. So that equals 15.3%. That is not counting my Federal Income Tax. That goes to schedules and deduction programs that make CPA's necessary. What percentage of tax there, is based on what ever is left after the cost of doing business(deductable costs)and certain personal expenses and deductions like most employees have. So I am paying 15.3% on my wages plus 7.65% of all of my employee's wages, plus my Federal Income Taxes. Then there is Federal Unemployment tax, State Unemployment tax, 7% state sales tax and 2.75% county sales tax on my purchases(we don't have a state or county income tax), then there are wheel taxes on all of our vehicle registrations, and of course property taxes on the physical business property, and real property tax, then personal property taxes and business licensing. The paper work alone is a tax. | ||
| 86129squids |
WTF Vern- I'll examine the post later, to try and understand the $$$, but good luck on that. Pirsig talked about quality. | ||
| Ft_bstrd |
Vern, you left out the tax preparation fees. You can't keep up with that crap on your own. | ||
| Dentguy |
In addition to the stuff Etennuly mentioned, I have state income tax and the company (me) also has to pay County business tax on gross receipts (total company income before any deductions). Almost forgot a corporate charter fee. Also in our county the vehicle personal property tax is higher if the vehicle is used for more than 50% business. And yes, the tax prep fees. Just the cost of doing business I guess. On a different subject I just found out that I can no longer park my enclosed trailer on the street at my house (where there are no houses and no home owners association) even though I pay for the tags on it and personal property tax to have it parked in the county. The county passed a law when nobody was looking. At least nobody I know. | ||
| Fahren |
Funny.....you just described self employment in a down economy! LOL you got that right! I left a big partnership in 2003 to go solo. No regrets, but man, it takes a lot of effort. +1 on all the rundown on withholding and unemployment taxes - I gave up being an employer for that, since I didn't have enough employees to make it worth it. All in all, though, we can kvetch and moan about taxes and all sorts of stuff, but being your own boss/slave-driver,... well, it doensn't suck, overall. Not for everyone, surely, and I'll go on about taxes as much as the next guy, but I can't really complain. | ||
| M2me |
If you own the capital you pay 6.2% Social Security tax and your employees pay 6.2%. The total is 12.4%. If you're self-employed, you own the capital and employee yourself. So you pay 12.4% Social Security tax. Let me fire up the old calculator. 6.2 + 6.2 = 12.4. I don't get it. Is this a trick question? | ||
| Etennuly |
M2me, not trick, you just forgot the Medicare payment of 1.45% for employees and 1.45% employer matching. That is the additional 2.9% for self employed folks. If you forget to pay it....they will let you know!  | ||
| Etennuly |
In a different time and place I was incorporated. That in itself entails another can of worms and more need of outside help. Annual corporation dues, a legal firm to record and keep records, separate taxation and potentially different insurances. All good when happy times abound.  | ||
| Glitch |
Who is John Galt? | ||
| Blake |
The point is that if you are self-employed, like me, you pay twice the tax that those who are working for a corporation pay. I don't understand why we don't all pay the same rate. I don't understand the rationale behind splitting the tax so that the corporation pays half of it. Seems to me like our government dearly wants folks to work for corporations rather than themselves. From my perspective, it sucks. Would be interesting to learn the history of how that became law and the commonly accepted practice in America. Unless I live to be 120, I'll not see a decent return from what I've contributed to social security. I've been paying into it since I was a teenager working at the local service station some 30 years ago; full benefits start at age 67, about eight or nine years before men on average cease breathing. It's outrageous. It's really outrageous if you don't earn enough to exceed the income level where social security taxes cut off, currently $106,800. | ||
| Reindog |
Who is John Galt? That is exactly what I was wondering. The looters are working overtime. | ||
| Pso |
Several points- Blake I have been paying into SS since May 10th, 1963, almost 50 years and I want to collect everything that I hav put into it, includeing the extra match for SS and Medicare when in solo practice. I was incorporated (Prof. Corp.)as a health care provider. I paid my stuff and also in Md., Injured Workers Comp.Ins. but being the sole stock owner and only employee, if I were injured my accountant told me that I could not be eligible to collect Md. injured workers comp. After about 10 years of private practice I met with my accountant to do my annual taxes and she said "Doc, I have been doing your taxes for a long time now and it appears as if every year you are working more hours and days and making a statistically significant less amount of money" I went from working 4 and 1/2 days per week to 6 and 1/2. Usually from 9 a.m. till 10 p.m. As an example of where I was hemoraging money Blue Cross/Blue Shield had cut my reembursment rate by 38% in 2 years. Also a Mangaged Health Care conference in San Fransisco in 1992 had stated that if you reject claims for payment on the average of two times the provider would not resubmit nor fight. I left my private practice as a result of going making less and less and being taxed to the gills, plus I was tired of telling my pt.s that I could not work for free and my contracts w/their insurance company's prohibited my charging the pt. directly and that I would provide a referal for them. Unfortanatly all the collegues that I would refer to with a clear conscince for quality had left their private practices. I will note that at the end the only pt.s other than military that I would gladly take on for treatment were Medicare. reembursemnt was better than some of the health insurance rates, paper work was much less, dispute resolution was rapid and fair and turn around of claims was rapid. This is my story, and I'm sticking to it, of the destruction of the small independent competent health care provider as a sole breadwiner, under the cruching weight of Managed Health Care. Perhaps this is why reportedly only three graduates of the 09 class of a local med school went into family medicine or OB/GYN, the rest want procedural med. where the $ are. Sorry about the long rant. But the the question was what happens to american small businees and this is what I see in the very small mental health care businesses. | ||
| Ft_bstrd |
I can't even imagine being an ENT or family practice physician. Those practices, in order to be even remotely profitable, are the medical equivalent of sausage mills. Oddly enough, the cash and carry practices are doing ok. Better hours, less hassle, more money. Appears to be the direction of things to come. |
