What Happened to My Profit?

March and April are normally difficult months for many people. It takes at least two bags of potato chips and a House marathon to avoid spending the weekend looking for receipts, 1099 slips and all the other paraphernalia our CPAs need. When the task takes on all the elements of climbing Mount Everest, we finally get the papers together, then go through a couple of bottles of wine or a six pack waiting for the verdict – do I owe or don’t I owe? And if I owe, how much? Of course if you have a good bookkeeper on your team, you can skip the chips and go directly to wine.

This year there seems to be a lot more stress. Many small businesses that would otherwise fly through tax prep are faced with an undeniable fact – profits have vanished. It has been a struggle in much of 2008 and now in 2009 to pay the bills, pay employees, and finally pay ourselves – or not. Profits are thin to nonexistent so none of us can afford to throw away a single dollar, especially on taxes.

Why is it, then, that so many people earning $50,000 or more after expenses and before paying themselves are still sole proprietors? The main reason is that no one told them they were overpaying their taxes. Depending upon how much revenue you bring in and how much money you pay yourself, this overpayment can represent thousands of dollars. Yes, you could be paying thousands of dollars in self-employment taxes that you do not need to pay.

The cure for this ailment is quick, easy and perfectly legal. Really. I do it for clients all day long. All you need to do is put your business into the right entity with the right tax election; then follow some simple rules that we teach you. So what would you do with a few thousand dollars more? Buy a new computer? Invest in some marketing? Pay yourself? Give to charity?

Whatever your reasons for wanting to put more in your pocket than you give to the government, come talk to us. Just email us at info@yourentitysolution.com or call 702 506 0190. You don’t get the benefits until the entity is set up, so don’t procrastinate. House – or any other favorite TV show - can wait.