Being an employee vs being self employed essay


being an employee vs being self employed essay

brokers will allow you to open the four most common account types: IRA, solo 401(k SEP IRA and simple IRA. How Do I Pay Income Taxes - As an Independent Contractor or a Sole Proprietor? You don't have to register your small business as a sole proprietor with your state, as you would have to do if you have an LLC or corporation business type. See our IRA provider ratings). The IRS says you can contribute up to 54,000 in your tax-deferred Self-Employed 401(k) for 2017, a 1,000 increase from 2016. The sole proprietor is a type of business for income tax purposes, and an independent contractor is the opposite of an employee, for payroll tax purposes. This post will help you decide which to use. Heres a great calculator, i found that tells you how much you could put away in each type of plan for your given income. Little did I know that contributing the maximum 17,000 in 2012 was not really the maximum.

being an employee vs being self employed essay

being an employee vs being self employed essay

In this situation, the excess contribution is taxed twice, once in the year when contributed (2015) and again when distributed (2016). Just remember 92.35.3 X 50 to apply to your operating profits and then multiply by the result by 20 to get your employer profit sharing contribution. If you are operating two different businesses, you can be a sole proprietor in both and an independent contractor in both. This is why I recommend everybody round down the amount they get to contribute to be safe.g. Thats 18,000 or 24,000 (age 50) for the employee contribution and up to 36,000 for the employer contribution for a total contribution of 53,000 or 59,000 (age 50) per year. Simple IRA Best for: Larger businesses, with up to 100 employees. THE details, an IRA is probably the easiest way for self-employed people to start saving for retirement.


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