5 ms·
The 401k part is available to sole proprietors too. "Solo 401k" or SEP-IRA are the tools for the job. They're easy to set up and you can put up to that same lim
by nilsbunger 5y ago
The 401k part is available to sole proprietors too. "Solo 401k" or SEP-IRA are the tools for the job. They're easy to set up and you can put up to that same limit ($45Kish?) away if you have enough income. And if you have a LOT of income ($200K+?) you can really turbocharge it with a defined-benefit plan, which lets you put away close to 50% of the consulting income for retirement.
Most of the other things you list are available to sole proprietors too: "(paying for your) retirement savings, depreciating assets, (paying for your) salaries, food, travel, lodging, equipment, and services"
I'm not sure about health care, are you sure there's no way to deduct it as a sole proprietor?
- camgunz 5y agoYeah, that's fair (yeah you can also deduct health care premiums on Schedule C). I think the liability shield is really important though, and if you're not wild about the S corp administrative overhead you can choose to be taxed as a sole proprietor.
- nilsbunger 5y agoAn LLC doesn't help you against your own actions though: "forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business" from https://www.nolo.com/legal-encyclopedia/limited-liability-protection-llcs-a-50-state-guide.html https://www.nolo.com/legal-encyclopedia/limited-liability-pr... My understanding is it won't help you if you're just consulting by yourself, because everything is your own action.
- camgunz 5y agoYeah I mean, if you commit negligence or malpractice (which are serious, not like the client didn't like your work) you're liable, so you need insurance. And you can still go to jail for actual crimes. But the creditor/bankruptcy liability is nice and basically free.