The Technicalities of Working From Home

I do not know a lot about how self-employment works in other countries, but I am very knowledgeable about how it works in the United States. In the US, there is a “self-employment” tax, which is how a self-employed individual pays for his or her Social Security and Medicare taxes. When it comes to employees, the employees and employer split the cost of these taxes, which results in each of them paying 7.65% of their eligible wages.

In the case of an independent contractor, however, the independent contractor is both the employee and the employer. This means that he or she must pay both halves of this tax, which results in a total of 15.3%. Here is a break down of this 15.3% tax: the first 12.4% of this tax is a social security tax that is on the first $113,700 dollars of an individual’s net self-employment income. The remaining 2.9% is a Medicare tax that is based on all of an individual’s net income made from self-employment. These were the numbers for 2013, and they may very well change in the coming years.

In order to have the same take-home income as a business owner that you would have as a “normal” employee for a company, you must generate a substantially larger gross income. This is more than possible, and many businesses manage to successfully accomplish this goal. Unfortunately, there is no set in stone business formula that you can use in order to make sure that you make as much money as you would like to, as each company varies widely in business expenses. Once you start your own company, you will simply have to determine what your average expenses are, and then create your own business formula from that.

It may take awhile to get the hang of things, and you will not be able to determine all of your numbers just within the first month of being open for business. Business is not an exact science, and it requires a lot of trial and error in order to be successful. The best advice that I can give you is to persevere through the beginning, and to not become discouraged if you get off to a rocky start. This is fairly normal, and you are by no means the first person to face difficulties when starting a business.

Just keep your eye on the prize, and think about how amazing it will feel when you finally make it. Everything will be worth it in the long run, but you have to stick with what you have started in order to reap the benefits.

or go back to last chapter:

Leave a Reply

Your email address will not be published. Required fields are marked *