Tom Meaglia photo

Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

March/April 2024

Tips for Sole Proprietors

Female Business Owner In Workshop Using Digital Tablet And Holding Mobile Phone

As sole proprietor of your small business, you’re responsible for everything from filing taxes to setting up your retirement plan. Your financial and tax professionals can help you take advantage of retirement plan and business deductions to help reduce your income tax bill.


First Up: A Retirement Plan
A solo 401(k) plan is a popular choice for sole proprietors. The business owner contributes to the plan as both employer and employee, up to the annual contribution limit for 401(k) plans. A SEP (Simplified Employee Pension) IRA is another option for sole proprietors or small businesses with only a few employees. Only the employer is allowed to make contributions to the plan. The same percentage of compensation must be contributed to employee accounts as the employer contributes to his or her own account.


Line Up Your Deductions
With a sole proprietorship, all business income and tax deductions are reported on your individual income tax return. Your tax professional can help you make the most of deductions that can lower your tax bill, including:


Health Insurance. You generally can take an above-the-line deduction for the cost of health insurance for yourself, your spouse and your dependents. The deduction is limited by the amount of your taxable income, so it isn’t available if your business has a loss.


Business Expenses. Deductible expenses include utilities, subscription services, travel and capital assets., You may be able to take the home office deduction for a portion of rent and utilities if an area of your home is dedicated exclusively to your business.


Self-employment Tax. Sole proprietors must pay both the employee and employer portion of self-employment tax (Social Security and Medicare.) You are allowed to deduct half the tax on your return.


A Different Business Structure
As your business grows, you may want to consider a different business structure that offers liability protection. An LLC (limited liability company) is the simplest way to structure a business and protect your assets. An S-corporation eliminates your liability and allows you to save on unemployment taxes. However, your Social Security benefits could be reduced. Your financial and tax professionals can help you structure your business appropriately.


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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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