Social Security Tax For Your S-Corp?
If your personal service business is organized as a Subchapter S corporation then get ready for a huge tax hit, 15.3% of the first $106,800 in profits and 2.9% thereafter. This will come about as part of the end of the Bush Administration tax cuts. The measure specifically attacks accounting, law, health and other professional industries but any business that is at its core making money off the skill and knowledge of its owners and employees had better be prepared to take a haircut for our rich Uncle Sam as well.
If you’re already organized as an S-Corp there is not much you can do, LLCs and partnerships are already taxed for Social Security so there is really not much reason to switch over.
If your business is in retail or manufacturing then you should not be affected by this measure, although expect to continue to receive scrutiny as to whether your salary is insufficient or your distributions excessive.
Medicare Tax on Investment Income
In a similar measure a 3.8% Medicare surtax will begin to be taxed on investment income for singles making over $200,000 or married couples making over $250,000. Where this could really bite is if you are selling your home or a business for a substantial gain; at once both raising your AGI and your investment income and subjecting your gain to additional tax.
Great Buys Overseas
Kiplinger predicts a continued rise of the dollar in the mid-term against most currencies except the Japanese yen and the Chinese yuan. European troubles make the dollar stronger by default, i.e. through no great strength on its own part. This could be advantageous to many of you planning on travelling to or buying property in foreign countries. It could also be a fantastic time to join a foreign service organization, like the Peace Corps, with a strong dollar improving your living standard abroad.
The Sweet Voice of Entrepreneurship
The Kauffman Foundation has launched a podcast series of interviews with entrepreneurs “Infectious Talk” that should provide a great fix of motivation and inspiration as you sweat away on developing your business. Don’t forget that the Kaufman Foundation also sponsors the fantastic Mindset Community that is fantastic for anyone wanting to achieve beyond the ordinary.
