41% in taxes and fees taken out of my pay check!

R

RegEdit

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This is why I am quitting this business of running my own freelance computer repair business. I did the math with TurboTax and as it turns out 41.4% of my net profits are going towards state and federal taxes and the California state BOAR licensing fee! I am done with this! Plus a customer disappeared on me with a loaner drive. Another was barking up MY tree demanding a refund because they couldn't get a pirated copy of Quicken to install. Let these people go to GeekSquad for $200 +.

Day trading stocks is a lot less hassle!
 
Even if you don't want to get back in the computer repair business you need to leave California. That state is trying its hardest to destroy its own economy.
 
I wouldn't throw in the towel yet. You are not the only one paying high taxes. I am not sure what your overall strategy is, but here are a few thoughts.

Consider raising your prices
Target the market of people who are willing to pay those prices
Look into other services that are more profitable
Upsell on every customer possible
keep track of every expense and possible write off
get an accountant and see what they can do to save you money on taxes

These are just a few things off the top of my head. Again, you are not the only one who has to deal with this so, make more money.
 
Paul Rodgers said:
Even if you don't want to get back in the computer repair business you need to leave California. That state is trying its hardest to destroy its own economy.
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I thought you were going to say country instead of economy, both fits.
 
I'm just not gonna give 41.4% of my labor into government bloat, wars, etc.

I think I might turn my websites into a self-help site with links to buy things like USB to SATA adapters on Amazon through their Associates referral program. I'll have a link for people to make donations if they ask me questions.
 
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RegEdit said:
I'm just not gonna give 41.4% of my labor into government bloat, wars, etc.
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Well, I do not know what to tell you. Its not a perfect world, but we got to live in it. We could go on about how things should change and how screwed up everything is, bla bla bla, or we could overcome those problems and become successful anyways. Just my thought on the matter.
 
Oh, and learn how to save if you have not already. Not to boast, but we have 4 different savings accounts and a couple share certificates that we put money into regularly. One of those savings is specifically for taxes. Trust me, it helps.
 
When my BOAR license expires I can't wait for that office to call and leave a message pretending to be a customer with their Sacramento phone number -- I'm in LA! They are really under funded. I think I'll call 'em back and pull some sort of prank call.
 
I think I will be with you actually, I had enough deductions my first few years that I owed under 10 large total. Now that the biz had a growth in 2011 (I made almost 3+ times from 2010), my tax man will be breathing heavy.
 
callthatgirl said:
I think I will be with you actually, I had enough deductions my first few years that I owed under 10 large total. Now that the biz had a growth in 2011 (I made almost 3+ times from 2010), my tax man will be breathing heavy.
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Thank God I have kids . . . maybe I should have another tax deduction . . . :)
 
Yep, when you work for the man part of your "self employment taxes" ie, medicare and social security is paid by your employer. When you are the man, you get to pay the whole thing, usually 13-15 percent. Part of this gets deducted from your income before federal taxes are taken out. But most people will pay around 40% without any deductions. And people wonder why %50 of small businesses fail with in the first few years.

Even property taxes are horrible. I looked at a place in the city limits and taxes were $600 a month for a building valued at $80,000. I bought a building just outside of the city limits and pay $150 per month in taxes. The city says it is worth it for the police patrols, and having the city plow sidewalks. I figure for the $450 a month savings, I can do extra marketing, buy an alarm system, and snow shovel my own sidewalks.
 
stro said:
Yep, when you work for the man part of your "self employment taxes" ie, medicare and social security is paid by your employer. When you are the man, you get to pay the whole thing, usually 13-15 percent. Part of this gets deducted from your income before federal taxes are taken out. But most people will pay around 40% without any deductions. And people wonder why %50 of small businesses fail with in the first few years.
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Thanks Stro!! That explains it! I'm paying 13 - 15% extra for earning a "salary" instead of just taking in "revenue". It's crazy because I have another business that just generates revenue from sources like Amzon.com , CCnow.com , etc. I don't receive ANY "salary" from this other business and my taxes are low, yet I RUN the business. I run it but I guess I don't have to pay "self-employment" taxes. I think I'm gonna focus on this other business or similar business ventures that don't have this damn "self-employment" tax. Knowledge is power.

Flat taxes don't make any sense for tiny businesses.

Anyone one on the Westside of Los Angeles who wants to buy my 3 domains just PM me. My sites are #1, #2 and #3 on Yahooo and Google for my area. I'm selling them all for $300 including hosting on unique IP's until the domains expire, at which time you can pay the $8 transfer fee with the registrar and be done with me.
 
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RegEdit said:
Thanks Stro!! That explains it! I'm paying 13 - 15% extra for earning a "salary" instead of just taking in "revenue". It's crazy because I have another business that just generates revenue from sources like Amzon.com , CCnow.com , etc. I don't receive ANY "salary" from this other business and my taxes are low, yet I RUN the business. I run it but I guess I don't have to pay "self-employment" taxes. I think I'm gonna focus on this other business or similar business ventures that don't have this damn "self-employment" tax. Knowledge is power.

Flat taxes don't make any sense for tiny businesses.

Anyone one on the Westside of Los Angeles who wants to buy my 3 domains just PM me. My sites are #1, #2 and #3 on Yahooo and Google for my area. I'm selling them all for $300 including hosting on unique IP's until the domains expire, at which time you can pay the $8 transfer fee with the registrar and be done with me.
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Woah... I think you need to hire an accountant.... ALL self employment earnings are subject to SE tax..... including those earned through commission systems... the same as ones made through selling hardware or services.
And yes flat taxes make a TON of sense...... it would lower those taxes from 40 to say 25% BUT it would only tax you on $$ spent (if using a flat sales tax)..... so much better!! Not to mention ALL money (legal and illegal) would be subject to taxation.
Also are you a sole prop. LLC or Inc? again sounds like you should hire an accountant man.
 
That is why it is so tough for legitimate businesses to compete on price against the "Cash" businesses.
When I lived in Finland I was employed and paid 62% of my salary in taxes.

Unfortunately taxes are a part of life and we just have to get on with it and set our prices accordingly.
 
I completely understand why you would want to change to some other business, California taxes are terrible and theirs to much government bs that's making things worse. But I do say go to a tax guy, if you can justify it as a business expense then you can write it off.
 
RegEdit said:
When my BOAR license expires I can't wait for that office to call and leave a message pretending to be a customer with their Sacramento phone number -- I'm in LA! They are really under funded. I think I'll call 'em back and pull some sort of prank call.
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Aw shucks, why bother? There's a little box on your renewal form that you can check for "business no longer in operation". Check that, send it in, and if they give you grief say you're no longer in business. Oh, and btw has anybody in CA seen that little note that's being sent with the license renewals, stating that they are now sharing their info with the state tax board, and if you don't pay your taxes they'll send them after you, AND revoke your license? They want to make it increasingly difficult to operate. I myself want to make just enough money to move to Oregon.
 
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