Episode 127 – How the Federal Government is incentivizing you to have employees
Feb 18, 2018
You might be shocked to learn this. The government loves when you hire employees. It has many benefits for them and the people you work with. They love it so much, in the tax law that past called Tax Cuts and Jobs Act of 2017, they created a special tax deduction to help make sure that your business pays out wages once it becomes profitable.
Join Kristin and Jeff as they look at this new tax deduction, That can reduce your small biz profits by 20%. However, beware if you do not have wages and you make 1 dollar too much... It can cost you the entire deduction.
- How the government is incentivizing you because of tax reform of 2017
- Deduction tipping point based on all income sources in the household
- $157,500 if you are not married
- $315,000 if you are married
- If your business profit is $100,000 you may get a $20,000 tax deduction
- Does not affect self-employment tax
- Does not count for service-based companies if your profit is above the tipping point
- If you exceed the tipping point even by $1, even if you are not a service-based company, you will need wage in your company to keep the deduction
- If you can get the deduction and you exceed the tipping point of household income
- The lesser of 20% of your profit or 50% of your wages
- IRS has not determined if the shareholder's wages for S-corporations will count as of the recording of this episode on 2/16/2017
- Why the Federal government wants you to have employees?
- Dangers of having large clients for businesses.
- Benefits of converting subcontractors to employees
- Misconceptions of hiring subcontractors
- What you must have to get started
- Employee identification number
- Inform you states tax collection department
- Contact your state’s unemployment department
- Best to contact a lawyer or accountant in your local area to make sure you contact the appropriate entities
- What you need to know if the employee is remote
- You will need a payroll service like Gusto
- Look to see if your benefits extend to your employees
- Episode 101 - Saving for your retirement
- Get a professional to help keep you updated or if you are an HQ Member use the group area to stay informed!
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