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Ask HN: How do I manage the profit of a successful website?

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Re: Ask HN: How do I manage the profit of a successful website?

#61

Post by DoreenMichele »

Congratulations. It's a problem many people would love to have.

Instead of (or in addition to) supporting charity, I will suggest that you set some aside for supporting "starving artist"/open source developer types via Patreon and similar. Find a few whose work you think actually has some value and kick a few bucks their way. For every rolling-in-dough business like yours, there are many more people trying to add value who aren't good at monetization and it's a serious problem.

Don't assume this will last forever. Take all the advice from knowledgeable, experienced people to invest, fund your retirement, etc.

Re: Ask HN: How do I manage the profit of a successful website?

#62

Post by dkysang »

Serenacula wrote: post #30
meetingthrower wrote: post #5

If you have it as an LLC, any profits will pass through to you through your schedule C, and you will be taxed at regular income tax rates. Your accountant will help. But tax optimization can REALLY matter, and as a small business you have massive opportunities to very legally and ethically optimize your business and tax. Top of mind, what you should really consider is: a) setting up a 401K under the business to shelt…

I don't think the spirit of the question was "how do I avoid paying taxes", but more along the lines of "what the hell do I do with all this money I don't need?". I would suggest giving it to charity, OP. My mother always said even poor folks should be giving at least 15% of their income to charity, but if you have more than you need, no reason not to increase that number.

It's unethetical to pay taxes if you're American. Have you seen what they do with that money?

Re: Ask HN: How do I manage the profit of a successful website?

#64

Post by brightball »

capableweb wrote: post #11
anemic wrote: post #7

How about donating to charity? If you don't need the money, there are people in the world who are struggling to get clean water. Spend some time to verify that your money goes to a good cause and not to scammers. You could start by donating to a local sports team to buy equipment to those who can't afford if, for example. Then go see their games to see what you've accomplished.

Donating excess profit (from self-run business and/or employment) to local non-profits/small organizations is the single most satisfying thing I've ever done. Not only does it feel great to donate the funds to them, but to be able to afterwards tell the change you're able to help them achieve is invaluable.

Yep. Always fun to sponsor a kids sports team and get your logo on the jerseys. :)

Re: Ask HN: How do I manage the profit of a successful website?

#65

Post by brightball »

vmception wrote: post #16

My favorite thing to do is tax shelter! With $45k/mo income self employed, you can contribute to a self directed Roth 401k as both the employee and the employer. This boosts your maximum 2022 annual contribution from $20,500 to $60,500. You can only contribute with 20% of the revenue, so you need around $300,000 to pump the max of $60,500 into one of these. It is slightly lower if you do this through an S-Corp. So ev…

This is certainly the most interesting answer.

Re: Ask HN: How do I manage the profit of a successful website?

#66

Post by throw1234651234 »

ryanjmo wrote: post #27

Are you a solo owner? You need to take an s-corp election and you do not need to pay yourself that type of salary. At most you should pay yourself $54,000 a year. The reason is money that goes through an s-corp you don’t pay self employment taxes on. Salary you do. That is 15%. You wouldn’t need to pay yourself more than $54,000 without the government getting upset. Right now, based on $54,000 a month you are losing…

Are you saying that if you have an S-Corp, and not an LLC, any money the company makes past $54,000 annually is tax free?

Re: Ask HN: How do I manage the profit of a successful website?

#67

Post by 55555 »

ryanmercer wrote: post #28
markvdb wrote: post #12

The HN audience, friendly as it is, is probably not your best advisor on these matters. Your accountant or tax adviser should have advised you about this ages ago. Either improve communication with your current accountant or fire him and get a new one able to properly answer this question.

A million times this. Some randoms on a website are the last people you want to take financial advice from, especially when that financial advice could potentially lead to a very hefty tax bill and/or criminal charges.

Dumb advice. Tons of people here have been in the exact same position and the advice given is super standard.

Re: Ask HN: How do I manage the profit of a successful website?

#68

Post by hooande »

Re-invest it in your business. Hire someone to help with SEO and SEM. Hire someone to write content like a blog. Find someone to manage your social media, moderate a discord and build community around your product. Spend (more) money on ads

You aren't going to find a better investment. A well performing mutual fund might get you 10% a year. Something riskier could get you up to 15%. I'm willing to bet you can make much more than that just by re-investing in the asset you already have. You can also avoid paying taxes on that money in the short term.

If you don't want to do any of that, just leave it in your business account until you do.

Re: Ask HN: How do I manage the profit of a successful website?

#69

Post by dayvid »

Serenacula wrote: post #30
meetingthrower wrote: post #5

If you have it as an LLC, any profits will pass through to you through your schedule C, and you will be taxed at regular income tax rates. Your accountant will help. But tax optimization can REALLY matter, and as a small business you have massive opportunities to very legally and ethically optimize your business and tax. Top of mind, what you should really consider is: a) setting up a 401K under the business to shelt…

I don't think the spirit of the question was "how do I avoid paying taxes", but more along the lines of "what the hell do I do with all this money I don't need?". I would suggest giving it to charity, OP. My mother always said even poor folks should be giving at least 15% of their income to charity, but if you have more than you need, no reason not to increase that number.

It's good to donate a percent to a charity (I think charities where you personally know people working for them are best). It's also very important to make sure you have money set aside for retirement or emergencies (even if you have a surplus). You may have children, your parents may need care, your small business may be disrupted, and it's good to have something to fall-back on or use if you need a runway or to invest some money into a new business.
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