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Self Employed???


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You need to consult with an attorney to get yourself properly setup in whatever business form you choose - S-corp, LLC, etc. Each one has pros and cons. A CPA can explain the tax repercussions of being self-employed. From experience, I can tell you that you will have to file quarterly taxes, you will have to pay ALL of the SS taxes - both employer and employee portions. I believe that's 26%, 13% of which you can use on your taxes as a deduction.

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Also, self employed can deduct the full cost of medical insurance.

Being SE can be a pain too. I would weigh the pros and cons before considering it. (I was a 1099 contract programmer, which is essentially SE.) Yes, the SS tax takes a big bite!! Also, if you fail to pay your quarterly taxes, the penalty is BIG!

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Beiong self employed is not all it's cracked up to be. The Self Employment tax is a biggie: you can't get around it ( unless you only take cash).

Being a one man corporation means nothing to a bank: you will likely still have to sign personally for any money you borrow. it gives you no special cache. Whether or not you need a coporate shell will depend on a lot of things, including the type of business you are in and whether you have employees and the like. Many choose a corporate shell for the limited liability it gives. That is important, but talk with your insurance agent about available coverage to cover the risks inherent in your business.

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