Caution Prospective Independent O/O! My Embarrassment.

Thing of it is...Your going to have so many owner-ops in this position...

Their gonna be showing net profits anywhere between 50-80k ..But only have $6-7k to pay taxes with- I've talked to several guys....And No- They don't send in quarterlies.

Will that Work is the question? I say No- But,this is a legitimate question

 

Consider social security to be 'gravy money' when you plan your retirement. In other words, don't count on it to pay any of your bills. Minimize your SS contributions in favor of your 401(k), Roth IRA and HSA contributions.

 

Thats about what my numbers work out to also. Right about 50% of gross revenue ends up in the wallet.

 

If a sole proprietor cannot budget for their quarterly tax payments, then this is a reason to go the S-Corp route and be an employee. You take a monthly paycheck, the payroll company takes out the federal and state taxes and submits them on your behalf and then there is not a pile of money showing in the bank account at month end for the wife to suggest a kitchen remodel, or to go out and buy a boat or Harley, or new pickup truck!!

I do tax resolution for clients as well, and the number one reason sole proprietor's, and small businesses in general, go out of business is because they cannot manage the tax paying part of the business.

Every business is unique, so until you run your numbers in different scenarios, you will not know what entity choice will work out best for your particular situation.

 

Here is a link from the social security administration: Quick Calculator. You can use it to play around with the numbers for your social security benefits. Here is the link for checking what your current benefits are based on what has been paid in during your lifetime and an estimated retirement age: my Social Security | Social Security Administration.

Not having to rely on social security for retirement comes down to how comfortable a person is investing in the stock market, annuities, etc.. and what type of lifestyle a person wants to live when they retire. Every situation is unique, so a blanket statement cannot be made to say one way is better than another, or do this or do that.

 

Just curious, what does a new tri-pac cost to install if you don't mind me asking?

 

Installed out the door, 8500ish, is what I've seen advertised.