How should I invest excess cash money without having to pay tax on it?

[Sublimation2026]

I run a handyman business on the side and I am trying to think of ways to invest this money without having to deposit it into my bank account and buy stock with it. I don't want to bump myself up another tax bracket and therefore have to pay more tax. I'm going to use part of the money for food and other daily expenses and part of it to put back into the business, but I'm going to have quite a fair bit of excess stuck in cash. What do you guys think?

[Lemur]

Presumably invested money makes money and any ROI you make will outweigh any taxes you owe..so not sure why this is a concern. Since this is a side business, consider opening a Solo 401(k) or a SEP-IRA and make employee contributions - in this way you won't pay taxes on earnings until you withdraw.

I would also get an accurate estimate of what you're planning to retain for food / back into business and what you plan to invest (return on equity).

[Sublimation2026]

@Lemur

I'm a noob to this stuff still, and having typed out my queries to you here I believe I need to go and talk to an accountant about all this or at least think ab out it more. Please excuse my ignorance.

So what you're saying is with more money in stocks, I'm increasing my ROI, which makes the tax I owe marginal? In my current tax bracket I have to pay $5,092 plus 32.5c for each $1 over $45,000. I anticipate on making more or less 120k from now until next financial year, which means I have to pay $29,467 plus 37c for each $1 over $120,000.

Food is $280 a month and I can't estimate what I'm putting back into the business as I'm just starting out but I can't imagine it'll be very much for at least another year - maybe $2k-3k. I plan to invest on large cap stocks at this point.

[Mister Imperceptible]

You could buy tangible assets, finished products and raw commodities for reinvestment in business.

For savings above and beyond, a gold coin purchased for $1225 in 2018 could have been sold for $1950-2050 to a coin dealer over the last 12 months for cash, a tidy profit. This is supposed to be a taxable event but if the transaction was under $10,000, you and the coin dealer say nothing, hard for the IRS to enforce because they don’t even know.

[Dream of Freedom]

Don't worry about raising your tax bracket. It doesn't work the way some people presuppose. The first you make 10k is taxed at 10%. The your income from 10k to 40k is taxed at 12%. From 40 to 85 it's 22% and so on. Increasing the bracket doesn't make you keep less on what you already made.

You could reinvest in the business. I think most business expenses are deductible.