What is the best way to set up a new business if I am working?
I currently work for a company. I would like to start my own consulting business on the side. My question is, how should I set up my company? As a separate entity? What is my best tax strategy? Is there a way to keep my personal income separte from my consulting income so that my tax rate doesn't go up or keep my from contributing to a Roth Ira etc? Finally would I be able to set up a SEP plan for my consulting company while still particpating at my employer's plan
User Comments
- You may want to read the article "Balancing Part-Time Business with Full-Time Job" http://www.powerhomebiz.com/vol114/balan...
Regarding tax rates, unfortunately I don't think there is a way for you to separate the two. Even if you do an LLC, you will need to file a K1 form to reflect your business earnings.
One tax-saving measure you may consider is Self-Employed 401K. From the article "Self-Employed 401K: A Retirement and Tax Savings Tool for Small Businesses" http://www.powerhomebiz.com/vol149/401k....
"The Self Employment 401(K) plan allows a self-employed individual or business owners with no employees other than a spouse to open and contribute to a Self-Employed 401(k) plan and receive a tax break from the contributions."
It would be best to consult with a financial/tax advisor to help you plan ways to control your taxes.
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