OVERVIEW:
Jason A. Duprat, Entrepreneur, Healthcare Practitioner, and Host of the Healthcare Entrepreneur Academy podcast, talks about two factors that influence how much you should pay yourself as a business owner. This episode references Tactical Tuesday #231 where Jason explains how to leverage tax benefits through an S Corp. In this episode, Jason continues to discuss additional factors to consider: your FICA tax rate and retirement planning.
EPISODE HIGHLIGHTS:
- Paying yourself through an S Corp. is a tax-saving strategy.
- It's important to know your retirement goals because that's going to play into how you set your W2 income.
- There are two types of retirement plans. A self-employed IRA and the contribution limit is 25% of your salary. And there's a Solo 401K or Individual 401K, which is currently capped at $19,500.
- With the Solo 401K, you can contribute on your own and the business can also contribute, which is capped at 25%.
- Each type of plan has a different set of rules, regulations, and limits around it.
- One thing to consider is if you set up a company contribution at 25% for your own retirement goals, you'll need to do the same for your employees at the same rate.
- Tax savings for your business is only one side of the equation. Planning for retirement is another so be sure to hire a consultant to guide you through both areas.
3 KEY POINTS:
- The way you set your W2 salary is going to be the biggest driver not only in your taxes in terms of FICA, but it's also going to be a factor in how much you can contribute to your retirement accounts.
- If you set your W2 salary too low, you're saving some FICA tax, but at the same time, you're limiting your ability to contribute to your retirement account.
- You have to match how much company contribution you've set up for yourself before you had employees for all employees you hire thereafter.
TWEETABLE QUOTES:
“You have to treat yourself, as the owner, the same way you treat your employees.” – Jason Duprat
“You always want to be thinking about your retirement goals. That's going to help you determine which plan to set up.” – Jason Duprat
RESOURCES:
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