It's easy to complicate things; it's hard to simplify them.
"Earn money. Spend less than you earn. Save and invest the difference. Rinse and repeat."
This is the advice an old boss would give when asked to distill financial planning into its simplest parts. It's excellent advice. When I first heard him deploy the words that would become a well-worn mantra in my mind, it was the moment I realized how easy it is to complicate things and how hard it is to simplify them.
Read MoreEven if you have all the right practical, rational information, when you're in a state of fear, anxiety, or stress, it is impossible to make sound, rational decisions. These states are innately emotional states where cognition is bypassed. When you're afraid, a part of your brain (amygdala) releases hormones that prepare your body for a "fight or flight" response. Humans struggle with having control when we're in these states because the amygdala has few connections to the rational parts of our brain, like our cortex.
Read MoreSo youโve discovered that tax saving wonder known as the S Corp. Youโre ready to start kicking the tires by learning what this โReasonable Salaryโ thing is all about. Letโs discuss what it means, why it matters, and the best way to find yours.
A reasonable salary for an S Corporation's shareholder-employee is the part of their compensation that must be treated as employee wages. The IRS requires you to be paid an appropriate wage for the services you provide your corporation because provides needed funding for Social Security and Medicare. Itโs best to work with an experienced tax professional to set your optimal reasonable salary, but this article will be a great primer to get acquainted with what a reasonable salary is.
Read MoreBy Pamela Rosario. Three ways legalizing your business will save you money in the long run.
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