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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?

#81

Post by [deleted] »

throw1234651234 wrote: post #66
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?

[deleted]

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

#82

Post by nlh »

A non-financial suggestion:

> I have no desire to expand the operation for many reasons. I’m perfectly happy working on it full time myself and don’t want to change anything.

This is a GREAT attitude. Don’t let others sway you from it. When seeking advice about situations like this, it becomes very common for folks to recommend what is typically taught of them in a growth-oriented society like we have. You’ll get lots of people telling you why you should grow, expand, reinvest, etc.

This has meant the death of some really terrific products. Growth for growth’s sake is a tempting dragon (I’ve fallen for it!) but stick to your guns here. You’ve got something great, so keep it great just the way you like it.

Do take note that complacency can be risky though - another commenter pointed out that situations like this don’t necessarily last by default, so stay aware of your competition and don’t fall behind. But congrats on building something profitable and great, and I wish you the best in keeping it that way!

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

#84

Post by dchuk »

TradingPlaces wrote: post #47

1. Do not assume this goes on forever. Use that $ to plan for the next thing. 2. Get an accountant and minimize tax.

This is the right advice. "What do I do with all this extra money I don't need" is not the way to think about it. Figure out a good way to collect all that money and invest it in safe-ish mechanisms and guarantee a good future for yourself and your family.

Plus, if you do the above, you still have the option to be charitable with your assets, but in an even more sustainable way than if you were to be charitable with the "extra" now because of the beauty of compounding.

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

#85

Post by tomcam »

calchris42 wrote: post #75
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…

Super helpful. I didn’t know about individual 401k’s. Thank you!

You in particular should also benefit greatly from a SEP IRA. Expensive to run but lets you sock away much much more.

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

#86

Post by cashsterling »

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…

This is very solid advice.

I would only add that you should consider maxing out your Roth IRA contribution every year (6k USD per year), particularly if you are young. You use post tax dollars to fund your Roth IRA, but all of the funds in your Roth IRA, including all gains, are tax free when you retire.

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

#87

Post by eaenki »

ghaff wrote: post #45
eaenki wrote: post #15

What a massive waste taking out 14k in salary. Almost everything can arguably be a business expense. Plus, any investment, just use SVPs or other methods where you don't incur taxation: would make no sense to take them out as salary just to invest them to ur name rather than a company's name. One day you'll pay the capital gains (which can themselves me minimized) and just buy a villa for business events, a range rov…

What you're advising sounds at least borderline fraudulent. Yes, they should absolutely be taking out any halfway reasonable business expenses (discuss with an accountant if it's not obvious). But I'm pretty sure buying a villa for the events that their 2 person company holds isn't in the reasonable expense category.

Dude people buy jets and Teslas as a business expense. super common. Dan bilzerian's ex beverly hills villa is owned by Wish as a business expense and the ceo parties there. cmon.

You can twist the villa however you want. It can be an investment through an SPV and you pay rent. To be clear, arguing (and using) something as a business expense or an investment is not fraudulent.

I don’t know who in their right mind would take out a million in salary and pay 50% of it and then buy a villa with $500k, rather than directly investing in a villa either for the appreciation itself or to use for business events, branding, whatever

And this is just one very simple way. there are countless permutations. You can go as complex as you want. You can mix and match around with credit and exotic laws and exotic countries and exotic legal structures all day long.

Sorry if reality upsets you: the world is setup by lawyers( and/politicians) for shareholders, and that's because they're the richest and capital=power.

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

#88

Post by colinmhayes »

remram wrote: post #57
colinmhayes wrote: post #56

Earlier quoted context omitted.

Administration fee is less important than overall impact, which I assume is what people who worry about overhead actually care about. There are plenty of evaluators that skip worrying about overhead and get to them meat of the issue, how much does this charity help per dollar.

What's the difference? What portion of your dollar is neither "help" nor "overhead"?

The impact of the dollar changes depending on what you spend it on. If you want to help veterans there are tons of ways to do that ranging from mental health outreach, to political action, to just giving them money. You can figure out which organization has the most impact per dollar and donate there. Handing out money to veterans might have extremely low overhead since it can be done by a single person mailing out checks, but that doesn't mean it's the most effective way to help.

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

#90

Post by meetingthrower »

tomcam wrote: post #85
calchris42 wrote: post #75

Earlier quoted context omitted.

Super helpful. I didn’t know about individual 401k’s. Thank you!

You in particular should also benefit greatly from a SEP IRA. Expensive to run but lets you sock away much much more.

Actually Solo 401k lets you put away just as much if not more, and has a Roth option. But both are worth considering for sure.
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