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How do I navigate taxes for my Self-employed business?
Home » Small Business » Being Successful...In a Self-Employeed Business » How do I navigate taxes for my Self-employed business?Taxes will probably be among the biggest headaches you will encounter in your self-employed business. But with some basic knowledge and help from professionals who specialize in taxes for self-employed individuals, you should make it through pain-free.
According to the Internal Revenue Service, self-employment tax is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. You can figure self-employment tax yourself using Schedule SE (Form 1040). The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
Also according to the Internal Revenue Service, federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. You generally have to make estimated tax payments if you expect to owe tax, including self-employment tax, of $1,000 or more when you file your return. There are two ways to pay as you go: withholding and estimated taxes. If you are a self-employed individual and do not have income tax withheld, you must make estimated tax payments, according to the Internal Revenue Service.
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