How to Correctly Pay Yourself 

Many small business owners wonder, “Should I put myself on payroll?” The answer depends on your business structure and tax considerations.

Background

The Federal Insurance Contribution Act (FICA) governs the collection of Social Security and Medicare taxes from employees and employers, while the Self-Employment Contribution Act (SECA) governs the collection of similar taxes from self-employed individuals. Under FICA, the employee and employer each pay a 6.2 percent Social Security tax and a 1.45 percent Medicare tax (15.3 percent total), while self-employed individuals pay the total 15.3 percent on defined self-employment income under SECA.

Retroactive to 2024 Tax Deduction Ideas

1. Make a deductible IRA contribution (tests apply) of up to $6,500 per person ($7,500 if over 49) by April 15, 2025 toward 2024 and deduct it in your 2024 return.
2. For individuals with qualified health savings plans, make a health savings account deposit of up to $3,850 single or $7,750 for family coverage by April 15, 2025 towards 2024 and deduct it in your 2024 return.

Retirement & Savings

Several key changes have been made to retirement savings rules that could impact your planning. Here’s a summary of what’s new:

Tax Implications of Side Hustles and Gig Work

With the rise of the gig economy, more individuals are earning extra income through freelance work, rideshare driving, online sales, or other side hustles. While this additional income can be a great financial boost, it also comes with tax responsibilities. The IRS considers this self-employment income, which means it must be reported—even if you don’t receive a 1099 form.

Earlier this month, the United States Department of Labor (DOL) published regulations that modified certain provisions of the Fair Labor Standards Act (FLSA). Specifically, the regulations increase the minimum salary for an employee to be exempt from FLSA overtime requirements. The following are some frequently asked questions regarding these changes.