Basic Question about O/O Taxes......

You keep mentioning getting screwed on taxes if you're single. Yes you pay more on personal taxes if you are single, but your number of dependents has nothing to do with your business taxes, and you MUST know something about running a business if you are going to be an O-O. If you're just planning on buying a truck and pocketing all of the money that you "think" are profits, don't waste your time. You won't last 6 months. If it was that easy, everybody would be doing it. About 80% of new O-O's fail in the first year because they don't know what they are doing.

 

My plan is to not go to an online message board looking for a business plan. Develop one of your own by reading every bit of information you can on the subject. That doesn't include watching Youtube videos of guys who claim to know it all. Nobody does.

 

Exemptions are going away starting 2018 anyways.
Set up LLC w/S election. Pay yourself enough to cover taxes through required payroll. Contribute 25% of salary to a SEP. Throw anything extra into a SEP, (up to 54k now, much more generous than trad. IRA) you get a tax deduction for this and you are really just putting it another savings vehicle.

 

Whats an sep

 

A sep is a retirement plan for the self employed. The only negative about a sep is that if you have employees that have been with you more than 3 out of the last five years, you must treat them equally, i.e. contribute as much to their plan as to yours.

If you don't have employees, or no qualifying employees, a SEP has VERY generous contribution limits, which allows the business owner to shelter a large portion of their income from income taxes (if they don't need it to live on) until retirement.

Even with a SEP, there is much to suggest funding a ROTH before funding the SEP, due to the Tax Free status of the ROTH in retirement. Even with paying income taxes now, the tax free growth on a ROTH beats tax deferred growth of a SEP, SiMPLE IRA or traditional IRA.