Q. I plan to quit my job and start my own business. What are the major financial issues I need to prepare for?
A. Working for yourself is many people's dream, but few people realize how expensive it could be. We will discuss 2 financial issues every newly self-employed person should be prepared for:
1. Taxes
Assume you are single, claim the standard deduction, and you made $100,000 in your first year, that's great! But for that $100,000 income, you have to send $30,582 to IRS for Federal income taxes, social security and medicare payroll taxes!
If you made $100,000 while working for someone else, you only have to pay $25,869 in those taxes, that's because your employer pays part of the payroll tax so your portion would be just $7,650 rather than $14,130 in the $30,582.
2. Insurance
This goes without saying, if you buy health insurance on your own, it could be very expensive - $3,400 a year for an individual policy or $8,500 for a family coverage policy.
For disability insurance, it could be more expensive, if you could get one at all - it's better to get one before you quit your job.
A. Working for yourself is many people's dream, but few people realize how expensive it could be. We will discuss 2 financial issues every newly self-employed person should be prepared for:
1. Taxes
Assume you are single, claim the standard deduction, and you made $100,000 in your first year, that's great! But for that $100,000 income, you have to send $30,582 to IRS for Federal income taxes, social security and medicare payroll taxes!
If you made $100,000 while working for someone else, you only have to pay $25,869 in those taxes, that's because your employer pays part of the payroll tax so your portion would be just $7,650 rather than $14,130 in the $30,582.
2. Insurance
This goes without saying, if you buy health insurance on your own, it could be very expensive - $3,400 a year for an individual policy or $8,500 for a family coverage policy.
For disability insurance, it could be more expensive, if you could get one at all - it's better to get one before you quit your job.
RSS Feed
