April 13 is Tax Freedom Day. In case you haven’t heard of it before (we hadn’t) that’s the day after which you start earning money for yourself instead of your federal, state and local taxman. If that seems like a long time, it is. But Tax Freedom Day actually arrives early this year — eight days sooner than in 2008 and two weeks sooner than in 2007, according to the nonpartisan Tax Foundation. While April 13 is Tax Freedom Day across America, it also varies slightly according to your state. Residents of Connecticut will celebrate Tax Freedom Day last, on April 30, while Alaskans celebrated already, back on March 23. These stats should provide some small comfort on April 15. After all, where would you rather live? Connecticut or Alaska?
Are you paying more than you should? The tax rate you pay depends, in part, on how you’ve chosen to organize your business — sole proprietorship, partnership, S corporation, etc. the Small Business Administration recently released a report showing average tax rates paid by various types of small business. It’s a pretty dull read, so we gleaned the essentials. U.S. small businesses pay an average effective tax rate of 19.8 percent. Sole proprietorships pay a rate of just 13.3 percent, small-business partnerships a rate of 23.6 percent and small-business S corporations 26.9 percent.
Tax = happiness? Nobody enjoys writing that check to the U.S. Treasury. But consider: residents of Denmark pay the highest income taxes in the world, close to half of what they earn. And yet Denmark is consistently ranked the happiest place on earth. Some people say it’s the social-welfare system. Others say it’s the beer. Nobody knows for sure. But we can tell you that we once took the Carlsberg Brewery tour in Copenhagen and recall feeling quite cheerful. (Next day: not so happy.)
Live longer, work more. If you’re a small-business owner and recent events have inspired you to believe (like many) that you’ll be working till you drop, take heart: the AARP is here to help you toil to a ripe old age. The AARP’s new Small Business Services division assists small-business owners in buying health insurance. The program is being tested now in Tampa and Chicago. AARP membership is not required. The association developed the idea for its new unit when an AARP study in 2007 showed half of all business owners are over 50 and half of small companies (10 or fewer employees) report “no one is trying to sell” them health insurance or other employee benefits. Small Business Services provides access to a variety of health insurance plans, as well as payroll services — even retirement plans (if you’re the wildly optimistic type).