Hi MMM Community,
I recently FU Money'd my way out of a steady "career" with benefits and whatnot. I still
HAVE to earn money (more coast Fi than full blown FI at this point) and pay for health insurance. I just do not currently want to do it
for a billion dollar company via a set 9-5 job.
I have some other high value niche skills -- think golf or tennis lesson tier of skill/clients/money.
My local club basically gave me the keys to the kingdom in terms of creating programming and setting rates. While I don't necessarily agree with their approach (beggars can't be choosers at this point for me), I need some help figuring out numbers. It gets further complicated when there's variation between member & non-member rates. Basically I just want to establish a minimum take home amount based on the following (and I know it won't be perfect, but i'd just like a rough estimation.)
Assumptions- I want to earn $100+ per hour
- Of the income the club pays me, I must pay a helper $20 hour for classes above 6 participants (assume currently that's all classes)
- I must also pay 25% in quarterly income taxes
- The club receives all proceeds and I receive 75% and the club 25% (sometimes 22% + 3% Stripe fees) - regardless I get 75% net proceeds
- Of 75% proceeds, I pay 25% in state income tax and still have to make sure my helper gets $20/hour
For example, let's say I get 6 people to sign up for a 10 (hour) class (maybe 2x/wk for 5 weeks) -- what do I need to charge them to give the club 25%, pay my assistant $20 per hour, and have $100 left after paying 25% in taxes?
Setting aside anything glaringly wrong/unethical about this -- what does my price per "session" or hour need to be for a 10 hour package of classes when I have anywhere from 6 (the minimum) to 10 (the theoretical maximum) people signed up in order for me to net a minimum of $100/hour per class after paying my helper* $20/hour and paying taxes on the full amount?
Or am I full of shit and if I venmo someone $20/hour for their work, it is up to them to claim?
I'm not sure it is doable. Would $150 hour afford the club their 25% ($37.50, leaving me $112.50) -- nope -- I pay 25% on that so there's $84.38 left, minus $20 for my helper and I'm making $64/hour.. should I try and reneg the club a flat rate per session so I have more income potential?
Let's say best case non members pay $25/hr and members pay $20/hr .... 6
members sign up at $20/hr * 10 hours = $200. 25% to club = $50 per person. 25% to taxes = $112.50. I pay my helper $20 cash per hour, so I walk away with $92.50/hour ... I think that's as good as I could hope.
Legalese/rules/laws/HALPI have no idea how to do this. I dislike the idea of being hired as a sole proprietor for a business to provide a service AND have to pay someone sorta under the table to act as a helper. If I get $100/hour, and have to pay a helper $20/hour for their time -- why should I pay 25% tax on the full $100/hour --shouldn't I pay 25% on $80 and my helper pay $25 self employment tax on the $20/hr?
Please help. I need to know my options and I don't want to pay taxes above the amount I actually earned. If I can "expense" their labor, great! Just let me know how so I can put the monkey on someone else's back. I definitely don't want to pay 25% on $100 income if I'm having to pay someone else $20 to help create the revenue.
I also do not want to be an employer or have employees, even if just 1099 stuff. That's a clusterfuck I do not want to deal with.
Please let me know my best path of minimum liability * best revenue -- I'm just kind of running with what the business owner said BUT don't want to bear the burden of what they should be covering due to my own ignorance. I do not want to be anything more than a self employed person. I probably sound dumb, but this is the first time I've tried to not have a traditional employer in my adult life.
*why is my helper making 1/5+ my income? They don't create the lesson plan. They have 1/20th the skill/experience, do not show up early or stay late to set up or break down, and are more or less a glorified babysitter. To level set, no one would take private lessons from them - they're just there to help herd the cats while I run the show.