Tony Novak profile picture
  "AskTony" column archive        


Most Popular

AskTony Archive

This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

New questions

Submit consumer finance questions at and health insurance questions at

Sponsored by: Insurance Exchange - your source of valuable information on state and federal health reform benefits.

Core Health Insurance - America's favorite mini-med insurance  with affordable premiums, freedom to choose providers, optional PPO discounts and guaranteed eligibility regardless of medical conditions.

Please support the Web sites that make publication of AskTony services possible.

Payroll and 401(k) for self-employed

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I’m looking for an entity to provide payroll taxes and 401K for my wife, who’s changing from w-2 to 1099 independent contractor travel agent. Is this something you do?

A: Perhaps the best approach might be to get set up with a computerized accounting program like Quickbooks that - once set-up - handles this easily and automatically. Over the long term this will be easier, more flexible, and less expensive than using an outside payroll company. While a one-person 401(k) is a possibility, it makes sense to exhaust the easier choices first: SEP, IRA, SIMPLE PLANS all may be more attractive substitutes for a 401(k). Consider the full 401(k) plan only is the easier and less expensive plans do not fit the requirement. While the substitutes are free, it will probably cost a few hundred dollars to operate a 401(k) due to the more complicated tax and Department of Labor requirements. The 401(k) is available through and OnlineAdviser service can provide help with the accounting system setup. It should only take an hour or two to set up the entire benefit program.


More resources: