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For someone working in tech on a good salary this should be closer to 50%, easily.
Even paying a high rent, and heading out every night one should be saving at least 25%.
Earlier quoted context omitted.
Elaboration time... I did this in the UK, similar likely applies in the states. I used to be an 'independent contractor'. I work for companies doing ecommerce / Java / Consulting work. I work a fixed term contract and leave when the project is complete. I set up a limited liability company with me as the director and the only employee. When I get a contract (work), the client hires my company rather than hiring me di…
I'm not even remotely close to being a lawyer, but I thought in the US a single-member LLC is taxed the same as a sole proprietor.
So, say you live in a very relaxed tax environment, you can incorporate your LLC, sell software services to US companies and pay small taxes in your country.
Not sure an unbounded 6% annual salary increase is plausible, especially over a 35-year period. That makes the "get a job" numbers quite inflated. I think its clear that the potential payoff from being an entrepreneur is very significantly higher than being an employee; it's a question of when someone's willingness to accept a higher risk matches their circumstances (luck, market, idea, etc.)
A more realistic model would assume your wage growth starts at, say 8-10% your first year and then tapers off to 0-1% after 10 years or so.
1: http://www.comparebloomington.us/include/reportsmedia_157_15...
This is very theoretical and I would say there are a lot of mistakes in the analysis I would look more simply at all the people I know that are entrepreneurs versus those that work in a job. At least 50 percent of the entrepreneurs have over $1 million In assets and in a few cases over $10 million Zero employees that I know have over $1 million in assets I think it is far more likely to be wealthy as an entrepreneur,…
Earlier quoted context omitted.
I'm not even remotely close to being a lawyer, but I thought in the US a single-member LLC is taxed the same as a sole proprietor.
By default, yes, but you have the option to elect as a corporation.
(IANA Lawyer or Accountant)
There's not a single mention of taxes in the article. I don't think that the average employee is aware that an entrepreneur/founder/self-employed person can save a lot of tax if they structure it right and are meticulous about it. A self-employed person earning $70K a year can be better off than an employee earning $100K.
I would also like to see some examples. If you're just writing code all day, you have an awfully low overhead. I lose over half of my side income after I hit a certain point that's covered by my deductions, at which point I simply stop doing side work.
This is very theoretical and I would say there are a lot of mistakes in the analysis I would look more simply at all the people I know that are entrepreneurs versus those that work in a job. At least 50 percent of the entrepreneurs have over $1 million In assets and in a few cases over $10 million Zero employees that I know have over $1 million in assets I think it is far more likely to be wealthy as an entrepreneur,…
Unless you're a relatively close personal friend, there's basically zero reason for someone who earned over $1M in non-public transactions (notably salary) to tell you about it, though.
Earlier quoted context omitted.
Can you expand upon that? I am always looking to reduce my taxes. I got killed with my 1099s this year.
I can't speak for American tax law, but in the UK there are some common methods of small business owners reducing taxes on income: Small payroll income so that you fall within a low income tax bracket. Top up salary with dividends as they have a much lower rate of tax. If you have a live at home wife, make sure she's employed by the company in some form, eg. you can pay her the minimum wage for secretarial duties. Id…
I believe the using dividends for tax avoidance is either no longer effective or has been cracked down upon.
You can also give less to the government on your VAT if your profit (or revenues, I can't remember which!) is below 150,000 GBP. Rates vary between 9% and 15%.