By Kenny Herbold http://www.work-at-home-jobs-missouri.com
Do you think you are ready to make that leap to full self-employment? The profit from your part-time (up till now :-) business is matching or exceeding your regular paycheck, so you think itís time to fire your boss and make do without that paycheck. Before you take that final step to personal freedom, make sure you truly understand what you are giving up. Your employer paid benefits may cost you more than you realize. For many people it will take more than $40,000 of profit per year to replace a $40,000 annual salary.
When I talk about your employer paid benefits Iím not referring to ďfreeĒ office supplies, subsidized soft drinks, or even occasional free meal at holiday party. The items that you need to consider are benefits that are going to cost you most money. Although if you really like soda I guess you might want to include this too! According to a survey published by US Chamber of Commerce in January 2004, employer paid benefits averaged 42% of an employees salary in 2002. That means you need an additional 35 Ė 45% more than your current salary to make up for these lost benefits.
If this number shocks you, then letís take a look at some of typical benefits employers provide. Again, based on US Chamber of Commerce's survey medical insurance cost approximately 15% of an employee's salary. However, employers also cover cost of many other forms of insurance. They include
# Disability, # Dental, # Vision, # Life, # Unemployment, # Long Term Care Insurance, and # Workers Compensation
You might be thinking that you pay premiums for these products already. Even if you do, your employer is most likely paying lionís share of cost. Not to mention that many times premiums you are paying are using pre-tax dollars. This means you end up paying less in taxes because amount of your premium is deducted prior to calculating your taxable income.
When you own a home-based not only are are you going to be responsible for full cost of all forms of insurance using after-tax dollars, you are going to be responsible for self-employment taxes. Self-employment taxes include employer paid portion of Social Security and Medicare taxes. This means your bill for these taxes are going to double. Instead of paying 7.65% of your income for these, you will now pay 15.30%. And donít forget about having to pay estimated taxes. You will have to file and pay taxes 4 times a year now, instead of just once. Not only do your taxes increase so do headaches and cost of filing!