Oct 17, 20221 min read

Are You Paying To Much Tax as Self-Employed?

Updated: Oct 20, 2022

Self-employed retirement planning

As a self-employed, you may be paying thousands of dollars more in taxes every year! Therefore, it is very important to correctly understand the tax planning scheme of large enterprises to reduce the tax amount.

For general self-employers, as well as SME owners
Hold a 1099 and have a net income of more than $70,000 to $80,000 a year
Those who have not yet established a company

Solo 401(k)

Unlike a traditional 401K, a Solo 401(k) is designed to make a series of important tax planning for the following business owners:

Designed for business owners without employees (except spouse)
Also known as “Business Owner Only” (Business Owner acts as both employee and employer)

Self-Employed tax saving plan examples

100K SCENARIO	TAX	TAX SAVINGS
Schedule C	$ 29,310	$ 0
+ $6,000 IRA	$ 27,696	$ 1,614
＋ Maximum SEP	$ 24,313	$ 4,997
S Corp Receives $100K $40K salary + Profit Sharing + Solo 401(k)	$ 15,418	$ 13,892
150K SCENARIO	TAX	TAX SAVINGS
Schedule C	$ 49,112	$ 0
+ $6,000 IRA	$ 47,398	$ 1,714
＋ Maximum SEP	$ 41,286	$ 7,826
S Corp Receives $150K $60K salary + Profit Sharing + $19.5K Solo 401(k)	$ 31,233	$ 17,879
200K SCENARIO	TAX	TAX SAVINGS
Schedule C	$ 66,286	$ 0
+ $6,000 IRA	$ 63,201	$ 3,085
＋ Maximum SEP	$ 53,749	$ 12,537
S Corp Receives $200K $60K salary + Profit Sharing + $19.5K Solo 401(k)	$ 47,850	$ 18,436

*These plans are designed according to the actual situation of each customers, the above cases are for reference only!

Still have questions? The best thing to do is talk to a financial professional who can sit with you, calculate the numbers for what you’ll need versus want, and figure out what’s best.

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