Net vs gross

So I have a small part time business that one day I would like to use to replace my day job. So I’m trying to do some general math to figure out how much yearly I would need to gross to make that happen. Now I’m NOWHERE near this I’m just trying to run some general numbers, obviously I know all states are different, tax wise, and all companies have different equipment and chem expenses. I live in CT so my tax rate is higher than most. Lets say you want to take home 75,000 a year. You have chem and equipment cost, you have let’s say two employees that you pay 18.00 per hour, you have insurance for them and the business, you have a marketing budget, the company has a healthy profit let’s say 10% and of course sate and federal taxes. After all those and other expenses I’m sure I’m forgetting some, what does the company need to gross to net that 75,000 for yourself?

My company is really small and newer so I have no idea What my numbers are I’m hoping someone wouldn’t mind sharing theres.

It depends how much it cost’s you to earn business… I know a guy local to me who makes well over 160K out of an old van, he uses no chems… just a small hot water skid he pushes around… I don’t like his work (trash) but the guys busy all year… and with a tiny investment

Impossible to answer but based on my numbers and what I’ve gleaned here, it’s typical for expenses in this business to sit around 30% +/- 10% depending on how big or small you are.

With that in mind, if you work by yourself and thus have no labor costs, I think you could take home 75k after taxes if you bill around 125k.

I would expect a one man show to gross $120k+. With 2 employees $240k+.

Fixed That For You, lol

I’m in agreement with those above. A solo operator should be able to net $75k with around $110-120k gross.

But if you receive a subsidy (advance premium tax credit) for your healthcare, $75k makes absolutely no sense. $65k is the sweet spot (for a two person household). Otherwise it’s a $8k tax penalty. If you go over $65K net, you can put the extra into an IRA

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TYFT…Thank you for that! I have to stop and think every time I see you use acronyms! :man_facepalming:

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Bingo. My rough math says Until I can net over let’s say 100k it’s best to stay around 65k.

I made very similar mistake last year and it cost Me some money. I had over 20k more in income but after taxes were taken out and including my return from the previous year I only kept about 3k more. I have a great cpa now and it won’t happen like that again.

Maybe it was a two or three years ago. It was when I left the military and jumped right into self employment. Growing pains suck. But it’s better to think about these things beforehand.

Something’s not right about that. I can’t think of a situation in which you’d essentially have an 85% tax rate on an additional 20k in income.

It’s called the ACA subsidy cliff. If you make more than 4x the poverty line for your size family, you lose your subsidy entirely. That’s typically a gap of ~$8k. So technically speaking, you could be $1 over the limit, and effectively pay 8,000% tax on that one dollar…

It’s easily avoided, though. Just make an IRA contribution to bring your taxable income back under the limit.

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It wasn’t 85%. I went from working in the Marine Corps and when you’re in all allowances are not considered income so your income is incredibly low so you get a large return. Then half the year was self employed and I didnt show much income that year either. I’m not entirely sure how it happened. But the next year I made the 20k more and basically since I went from a w2 employee with the govment to self employed i had to pay a substantially higher tax rate so between the two year final income after tax return and payouts i was only able to keep line 3k more. Maybe it was 5k. Either way now I pay a cpa to tell me where to put my money and how to spend it. So now I make more and actually keep more. I tried the diy taxes and it didn’t work out for me.

I know it’s confusing and I probably messed up the explanation but now I don’t worry about it. Again I just pay someone else to deal with it. Saves a ton of Time b

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Yes. @Infinity nailed it. Health care costs and subsidies create the invisible wall which small full-timers and “mom & pop” operations are up against … weather they know it or not. You either pour money into more equipment at the end of each year to stay just under the income threshold, or you keep the money one year and lose it the next by getting slammed with skyrocketing health insurance premiums.

This topic is worthy of a whole forum.

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This would have to be a Traditional IRA contribution, correct?

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Would any sole proprietors or 1 man shows care to chime in on their net and take home ? Personal info I know… could be a lounge question.

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Correct.

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So this website would give you the breakdown?

And you’re saying to stay below 4x the poverty line…or go way over it. lol

Pretty much. Unless you have some other source of health insurance, or none at all.

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Before I hired employees net profit was between 65%-75%, now with employees it’s around 40%.

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