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Similar to a few other comments, I use Intuit payroll (Gusto might be better in terms of UI and support) and pay myself as an employee through S-Corp. Every US
by fakeElonMusk 8y ago
Similar to a few other comments, I use Intuit payroll (Gusto might be better in terms of UI and support) and pay myself as an employee through S-Corp. Every US freelance should structure things this way IMO, so that you can take advantage of 401k contribution and company match. You can match up to 50k roughly and that match is a business expense, so you get the money plus a deduction. As you said, this is reaping the benefits of regular employment, with the additional benefit of being able to crank up the company match in years where you make more (or can pay yourself less).
In terms of cash management, I do quarterly transfers to Vanguard which is the 401k admin. Then 1-2 times per year I pay myself a close approximation of my final S-Corp distribution (plus regular monthly payroll).
- jermaustin1 8y agoWhy did you chose to go with a 401k instead of a SEP-IRA?
- fakeElonMusk 8y agoI could have done a SEP but AFAIK the only difference is supposed to be less expenses vs. a 401k, but my 401k plan admin has very low fees. Also not sure if the SEP allows for a pre-tax benefit for the employee.
- ishjoh 8y agoSomething I learned about on HN a while back was a Self-Employed 401k offered by most large providers (https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview https://www.fidelity.com/retirement-ira/small-business/self-...) It's great as I can contribute 18k of personal funds and a max of 36k of business profits (or max of 25% of profits, whichever is less). For the fidelity plan I have there are no annual or associated fees. I put all my money into index funds and those are the only fees I pay. It's really been excellent for me.