Tax Money to Withold

[winchester49]

To all agents who buys Direct Mail Leads on a weekly basis and write anywhere from 2-5k a week, what percentage of your income should be held back to pay your federal, state and city(if yours has a tax.) I know you can write off your leads, mileage, office space, phones and incidental expenses but if you can give what your net tax percentage is, it would be very helpful.

Thank you

 

[liorselamb]

To all agents who buys Direct Mail Leads on a weekly basis and write anywhere from 2-5k a week, what percentage of your income should be held back to pay your federal, state and city(if yours has a tax.) I know you can write off your leads, mileage, office space, phones and incidental expenses but if you can give what your net tax percentage is, it would be very helpful. Thank you

It depends on your income and tax bracket. I think the safe zone is about 20%

 

[jerry176]

IRS & State Tax Brackets Calculator || Gain Power With Knowledge

 

[Josh]

Time to get a CPA. They're really not that expensive and they're really worth it.

It doesn't matter what line of insurance you sell or really even what industry you're in, if you're self employed you need to keep an eye on your income/expenses (paying quarterly estimates helps too). It's also important to setup a business account that you keep separate from your personal finances.

You can get a lot more fancy, but here is a good place to start:

1. Keep receipts for all your expenses. Personal meals are generally only reimbursable if you travel away from home and have to spend the night somewhere, out driving all day doesn't count.
2. Track your mileage. It's easier to do it if you log it as it's happening. Make sure to keep notes that include where you started, where you went, and why you went there along with how many miles the trip was.
3. Track your gross income. Advances can make this a touch tricky because they might only 1099 based off of your actual earnings that year vs the advance (interest free loan), so when you get your statements and they look drastically different, that can be why.
4. After you take out all your expenses plus your mileage figure on paying 20% of that to the tax man and you'll probably be safe. A CPA would really be the best point of reference on this though, doing a profit and loss statement would give you an idea of what you're looking at in a much more meaningful way.


Again, it's really easy to get this mixed up in your personal checking account and that can make things a bit of a mess so anyone in business for themselves should have a business account they pay everything in and out of and then you can write yourself paychecks and figure every time you cut yourself a check 20% or so of that is what you're going to end up owing in taxes, that keeps it really neat.

Lastly, get a CPA

 

[FexMex]

20% is perfect and at the end of the year, if you have a good CPA you will be able to give YOURSELF a refund instead of having the government give you a refund after hanging onto your money interest free. Technically you should file quarterly, but if you don't do that and hang onto your money throughout the year, make sure you keep it in a separate tax savings account - because remember, it isn't your money! It also helps to make weekly or even daily transfers depending on how much you are getting paid, that way it doesn't hurt so much - and put it in a savings account that will at least pay you a little interest.

 

[sirherbie]

I disagree one has to track every single stop you make daily. I simply take my milage at the beginning of the day and and when I get home on days I work as its all business miles. One would go bonkers tracking every single stop. The irs could also care less.

 

[Josh]

I disagree one has to track every single stop you make daily. I simply take my milage at the beginning of the day and and when I get home on days I work as its all business miles. One would go bonkers tracking every single stop. The irs could also care less.

Here is the IRS publication about it: http://www.irs.gov/pub/irs-pdf/p463.pdf

Page 27 has a sample.

 

[winchester49]

Thanks for everyones response............it looks like 20% is the number.

 

[Agentguy5]

Here is the IRS publication about it: http://www.irs.gov/pub/irs-pdf/p463.pdf

Page 27 has a sample.

My wife and I are entering a new tax bracket this year... Will we be able to pay less money on taxes if we write ourselves a weekly check from our business?

 

[FexMex]

My wife and I are entering a new tax bracket this year... Will we be able to pay less money on taxes if we write ourselves a weekly check from our business?

I'm not a CPA, but no - assuming you have your business set up as an LLC, S-Corp, etc. it doesn't matter, it's all pass-through taxation so whatever the business makes, you make. It doesn't really matter what checks you cut. Now if your wife by herself is in a lower tax bracket and she isn't involved in the business, then yes, you could save on taxes by cutting her a check, but it doesn't look like that's the case.