So, let's look at this logically. If you were to pay yourself, say, $1667 over a twelve-month period as a salary through your corporation. That implies you've allocated roughly $100–$200 toward Social Security and another $50 toward Medicare, plus perhaps $1,000 for standard deductions or federal taxes. However, if you take $2,500 out of that initial $5,000 and pay it directly to yourself as personal income, you have full access to those funds via 😁 . Consequently, that entire amount totals $2,500 multiplied by 12, which equals $10000. This sum is deposited into your account throughout the year alongside the figures we calculated previously.
Therefore, when calculating the annual cost of running a small business, you shouldn't focus on $1667 (or whatever the total includes with various benefits). Instead, you should only count what is actually surrendered to the IRS. Everything else stays in your pocket rather than going to the government.
Furthermore, those payments made to her didn't just "vanish" into thin air. 😁They must be factored into the total amount she withdrew from the company.
It feels like watching one of those "Aha!" moments on the news. 😉
It is possible, but those are services you would end up paying an accountant a fortune for. Why should I bother getting tangled up in all that right now?😁
Actually, there is an option where you could potentially place your company into a dormant status. You should look into how that works by consulting with other professionals. If you haven't performed any business activities during a given month, you might be able to put the entity on hold without issue. Of course, certain restrictions will still apply.
If you sign up for a steady paycheck, you can't just guess when the money arrives. You have to make those payments consistently. There is no room for delays or three-month backlogs. If you fall behind, someone will be knocking on your door immediately. Suppose you earn $0.00 in a given month; then you would pay out 2,000 the first month, 2,000 the second, and 2,000 the third until the next payout cycle hits after three months.
It sounds ideal in theory, but all of this requires strictly regular payments.
Yes, if you have a reported salary, then you ARE obligated to pay taxes. You MUST contribute to Social Security and Medicare.
Everything else is optional.
So, you are forced to fund things that provide you with zero tangible benefit, while anything that actually helps you down the road remains entirely optional. Our government is a joke.
Oh, right, I almost overlooked a crucial detail. In this alternative scenario, you run the risk of facing criminal prosecution for the rest of your life.
These are difficult fundamentals. Anyone in the real world understands this.
You must register either a sole proprietorship or an LLC. A sole proprietorship is cheaper to set up, whereas an LLC provides more freedom and legal protections. Check the other threads for more detailed information. Once that is settled, you pay yourself whatever salary you choose. The catch is that you must pay taxes to the government on that salary. This is true in any era of history. These taxes are what fund the state.
So, you pay taxes. That tax money isn't entirely thrown away; you are contributing to Social Security. Think of it as intergenerational solidarity. Based on those contributions, the government will provide your retirement benefits in a few years. Those benefits are as secure as the United States itself. Then, there is also your private retirement contribution. I believe it is currently 15% for one part and 5% for another, or something to that effect. However, that might shift to a 10%/10% split in a few years. Perhaps it will. Who knows? No one can say for certain right now.
Then you pay that tax to the government. You can pay it immediately or at the end of the year when you file your tax return. You might even receive a refund if you have many children or high medical expenses. It is too broad a topic to explain everything here. Generally, you can claim many deductions, and they apply a specific tax credit rate to determine your refund. On a gross of $7,200, the tax would be $1,800. Grab a calculator and figure out the percentage. Since you seem lazy, I will do it for you: 25%. But it depends on your income. The higher your salary, the more you owe. I was taken advantage of in my case. Or rather, my employer took advantage of me; had he paid me slightly less, he would have only paid 15%. Regardless, it doesn't matter to me.
To get back to the point, you have various tax brackets—15%, 25%, 35%, 45%, I believe—depending on your total income. Most small business owners pay themselves the bare minimum to avoid handing all their cash over to the government in taxes. If I owned a company, I would likely do the same. It is absurd how much this government takes. But that is because we are heavily in debt and need to repay loans. Whom else are they going to tax if not the people driving the economy?
Moving on. Once you have paid everything owed to the government, you can start saving money. There are several options, but it usually boils down to mutual funds, IRAs, savings accounts, life insurance, or a standard CD. As I mentioned, you can save however you like. You could buy real estate and sell it during retirement. You could buy land. You could buy gold. You can do whatever you want. The only thing that makes no sense is keeping cash under a mattress, because you lose value to inflation. Money itself is just paper that holds no intrinsic value.
And that is essentially it. If you decide to work "under the table"—which is possible if your clients don't require official invoices or paperwork—you can skip the LLC registration and income reporting entirely. You simply put the cash directly into your pocket and then invest that money into your own retirement fund.
There it is. Honestly, I find it strange that you don't already know this...
By the way, you haven't provided enough information for us to give you a proper answer. You didn't specify whether you intend to report your income or if you plan on working under the table.
In any case, there are three pillars of retirement savings, life insurance, and housing savings accounts—all of which receive some level of government subsidy or incentive. Beyond those, you have corporate stocks that you can purchase yourself and liquidate once you retire. There is also real estate; you could invest in acreage to hold onto and sell during retirement to fund your lifestyle. Land rarely loses its value. Look, all of this comes down to your own choices. We could sit here and debate this indefinitely. Nothing is ever 100% guaranteed.
It is beside the point. I am not claiming that the Chinese person is becoming the primary consumer; rather, my argument is that the entire world is evolving into an equal landscape of producers and consumers. And do you truly believe the upper class hasn't suffered losses already? Have you forgotten what happened just a few months ago? There was a wealthy businessman in Germany who took his own life because he couldn't restructure the debt for his pharmaceutical company. That man employed hundreds of people. In this shift, the upper class has lost the most. But, as I stated before, it is irrelevant...
Let’s take a moment to analyze this. I first entered the Nasdaq through an ExxonMobil IPO. Since then, the index climbed toward the 5,000 mark before beginning its descent. It took me some time to realize I was looking at a bottomless pit, and I finally exited when it hit around 3,000. All told, my losses were minimal. Perhaps just one month's salary.
You bought into the Nasdaq at its peak. If you were tracking the index directly—rather than gambling on speculative stocks—you are currently sitting on a loss of somewhere between 75% and 95%.
And yet, you have the audacity to laugh at me? Is there a flaw in my logic, or am I simply losing my mind?
redmaker33, I was active on the market when the Nasdaq was sitting at 5,000. I stayed through 4,000. I was still there when it hit 3,000, and that is exactly when I exited—just as everyone was shouting that a recovery was imminent because things simply couldn't drop any further. They argued the P/E ratio was bottomed out. Now, the Nasdaq is hovering around 1,300 with nothing but minor rallies, and if current trends hold, it’s heading toward 1,000. Earnings will eventually adjust until the P/E hits 30. Personally, I find great satisfaction in knowing I got out "on time." I will take my losses now, while you can sit around waiting thirty years for a recovery. We shall see who made the smarter move in the end.
restlesscrane152, after all the insults and condescension you've thrown my way, I refuse to respond with similar vitriol. Instead, I will attempt to explain this clearly, in the hope that you might actually grasp the concept: If an average Chinese person earned the same as a German person, that worker would transition from a mere producer to a consumer. That consumer would then fuel the global economy just as much as the current economic superpowers do today. Manufacturing itself means absolutely nothing without CONSUMPTION. Is that clear enough, or do I need to draw a diagram? The redistribution of wealth is an unavoidable consequence of a globalized economy.
But let’s be realistic here. Do you honestly believe there will be private investors willing to step in and buy these banks? Ever? Not until the economy actually recovers. Go ahead and start a poll on the stocks subforum. Ask people when they think the Nasdaq will hit 5,000 again. Give them whatever options you want, but include "more than 20 years" as one choice and watch what happens. 99% of them will pick that. Or better yet, ask them when they think the S&P 500 will return to its old peak of 14,000. I guarantee 99% of people will say it will take over 50 years.
In all honesty, nobody believes in a recovery anymore. That is precisely why people are saving instead of spending. They aren't buying anything, even if they have the cash and the prices look attractive. You could argue they are "punishing" the sellers because those sellers hiked up prices like fools before, and now it's clear business can be done at much lower rates. For me, it is a matter of principle. I refuse to buy a house just because banks and developers jacked up their margins and interest rates. I won't provide turnover to a predatory gang of usurers.
Now, to revisit your theory for a moment. It sounds fine if a recovery were actually imminent. However, a true recovery driven by globalization won't happen until wealth is distributed more equally across the globe. We won't see it until a small Chinese person earns the same as a German person for the same job—once you factor out shipping and tariffs. But that isn't the reality. Currently, a Chinese person might still be working for a dollar a day. That has to change first. Without that shift, there is no recovery. Both political parties can declare war or set arbitrary deadlines all they want. Until the standard of living in America goes up, this country will not see a recovery.
That is true. One must simply acknowledge that, in the short term—over the next few months or perhaps a year—this acts as a lesser evil to stabilize the situation. But looking at the long term? It is national suicide. By that, I mean within a two to five-year window.
Only an idiot would listen to you, Strumf 😉 only a fool. I have already learned my lesson. I refuse to touch anything with a P/E ratio higher than 10.
But regardless, I suspect this crisis will hit those with the most wealth the hardest. Perhaps it is simply nature's way of leveling the playing field.
What exactly does that mean to them? When the items they purchase at such ridiculous prices aren't even worthless—but instead, they actually end up owing something to others!