ABOUT HOSTS

Joe Anderson
ABOUT Joseph

As President of Pure Financial Advisors, Joe Anderson has led the company to achieve over $2 billion in assets under management and has grown their client base to over 2,160 in just ten years of the firm opening. When Joe began working with Pure Financial in 2008, they had almost no clients, negative revenue and no [...]

Alan Clopine
ABOUT Alan

Alan Clopine is the CEO & CFO of Pure Financial Advisors. He currently leads Pure Financial Advisors along with Michael Fenison and Joe Anderson. Alan joined the firm about one year after it was established. At that time the company had less than 100 clients and approximately $50 million of assets under management. As of [...]

Retiring in a Gig Economy

In the new economy, many people aren’t transitioning to a life of leisure in retirement but rather they are transitioning into owning their own business. According to the Betterment 2018 Report, 49% of workers 55 years old and older are saving for retirement with a side job.

The Gig (side job) Economy is opening up opportunities for retirees to start their dream jobs, earn a little extra money and get some significant tax breaks. Not sure if you should have an LLC, an S Corporation, partnership or sole proprietorship? Pure Financial’s experts, Joe Anderson and Alan Clopine discuss how to start a business and how to maximize the tax benefits with the Tax Cuts & Jobs Act.

Tax Checklist

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Important Points:

(1:18)How Much Do You Have Saved For Retirement?

(2:15)Retiring in the Gig Economy
• Getting Started
• Entity Selection
• Self-Employed Retirement Plan
• The New Tax Act

(3:12)How to Get Started in the Gig Economy
• Make a List of Your Skills
• Think About Your Schedule
• Be Willing to Develop New Skills
• Research Websites Devoted to Gig Jobs

(3:44)A Few Side Job Ideas to Get You Started
• Working in your current field
• Making money with your car
• Caring for others
• Selling physical products
• Tutoring students
Source: 250+ Ways to Make Extra Money by Nick Loper

(4:12)Best Practices in Setting Up Your Small Business
• Consider entity type
• Registration & licenses
• Open a business checking account
• Keep a good accounting of income & expenses
• Create a website

(5:15)Small Business Entity Types
• Sole Proprietorship
• Partnership
• Limited Liability Company
• S Corporation

(7:31)Are profits that pass through from an S-corp. are subject only to income taxes (not self-employment taxes)?

(8:55)Small Business Retirement Plans
• SEP IRA
• Simple IRA
• 401(k) (Solo & Safe Harbor)
• Defined Benefit Plan

(11:50) Contribution Levels of Small Business Retirement Plans

(13:30)New Qualified Business Income (QBI) Deduction for Small Business Owners from the Tax Cuts and Jobs Act of 2017 (199A)
• Up to 20% of small business profits
• Applies to all entities except C Corporations
• Applies to rental properties
• IRS Code 199A – Very complex and ambiguous rules

(15:30) Things to Consider With the New 20% Deduction for Small Business Owners
• Limited to 20% of your taxable income
• Much more complicated above these taxable incomes:
o Single: $157,500
o Married $315,000

(16:35) Can professionals in the fields of health, law, accounting, brokerage and consulting services ever benefit from the tax reform business deduction?

(18:30) Tax Cuts & Jobs Act: 4 Things Affecting Small Business Owners
• Lower Tax Rates
• 20% Business Deduction (199A)
• Higher Equipment Deductions (179 Deduction)
• Entertainment Expense Deduction Repealed

(20:10) VIEWER QUESTION: I have a question for you Al…As a result of the tax reform changes affecting small business owners, do you think most will see a reduction in taxes?

(21:30)VIEWER QUESTION: For the past decade I’ve had a sole-proprietor business that nets about $75,000 a year. Are there tax benefits to turning it into an LLC?

(23:20) Takeaways from the Show
• Many will work during retirement in a side job
• Get educated on opportunities & legal structures
• Take advantage of self-employed retirement plans
• Understand the new tax act to your benefit