I am self-employed what taxes I have to pay?

Question

Hey, I am self-employed and I wonder how am i going to pay my taxes, who do i go to, and what kind of taxes do i have to pay? Is it the same as a buiness owner?

Answer 1

Yes, it's the same as a business owner.

The IRS publishes tax guides for new small businesses, which I give to clients who keep their own books. They say they are useful.

Some of them are:
Publication 334, Tax Guide for Small Business
Publication 538, Accounting Periods and Methods
Publication 583, Starting a Business and Keeping Records

If you have employees, you will have to pay their withheld Federal Income Tax (FIT) and their 7.65% Social Security & Medicare share, which you will match for a total of 15.3% on a time schedule according to the total you owe. You need an IRS coupon book, and will deposit these taxes at you bank. You need a tax ID number (TIN) to pay and report their quarterly earnings.

All of the dates and amounts for your personal taxes, and for employee deposits are in the Tax Guide for Small Business, which you can read using the IRS web site link in the reference section below.

A self employed individual, who has not formed a separate business entity, a Corporation, Partnership, or LLC for example, will add a Schedule C, Business Income and Expenses, to his end of the year tax return, Form 1040, which is when he will also pay his tax for the first year's income. Another form Schedule SE is used to calculate taxable Self Employment income.

If you believe you will make a profit this year that exceeds $400, you can pay estimated taxes, which will include Self Employment Tax of 15.3% on your profit, and Federal Income Tax which is a graduated tax that ranges from 0% to 35%.

Because it is often difficult to estimate your first year income the regulations do not provide for penalties for failure to prepay, but after the first year you will have to pay as you go by means of estimated taxes paid through you bank. If you are making significant profits your first year you probably will want to start before April 15, 2007 when you will have to pay with your tax return. The IRS has toll free numbers that are listed in your tele directory to order forms, which can also be faxed or downloaded.
There are numbers for asking questions, too. All of these services are free.

If you have a question please feel free to e-mail me.

Answer 2

Wow the other answers here are scary. Here's the truth. Your friend should file for 2004 and 2005 at his earliest possible convenience. The IRS has no way of knowing whether he owes taxes or not. Why? As a self-employed person, he has to report his business income and business expenses and then figure his tax. Only he can do this. Also, if he has an Installment Agreement, the IRS might decide to revoke that. Technically, in order for an IA to be valid, the taxpayer has to file all missing tax returns. I would hate to see him lose his payment plan, so again filing the returns at his earliest convenience would be in his best interest. Finally, he's not going to jail, doesn't need to flee the country, or hire an attorney. He should hire a competent, experienced, and trustworthy tax accountant. Someone who understands back taxes and is willing to help him stay current on his taxes. My article below is about filing back taxes. It's not that hard. They key is getting organized, selecting the right tax professional, and staying calm. All the best.

Answer 3

You should probably seek the services of a firm like HR Block since it appears you are not very familiar with the tax law and how to file your tax return.

Being self-employed means that you work for yourself and that you earn income accordingly. That being the case, in addition to income taxes (federal and state), you also have to pay self-employment taxes which is essentially FICA, SDI, etc. which are social security taxes, disability insurance, etc. This amounts to approximately 15% in addition to income taxes. If you are a business owner, and the business is a legal separate entity (ie: it has its own ID number), then the business would file a return of its own and pay its own taxes. If the business is NOT a legally separate tax entity, then you would be technically 'self-employed' and would pay self-employment tax as described above.

So to sum up - unless the business entity has its own tax ID number, then you will be paying self-employment taxes as well as income taxes for your annual earnings.

Answer 4

Because you are self-employed, you are the business owner; which means you are responsible for both employee and employer taxes: Medicare, FICA, State and Federal Income Tax, everything. Your best bet (just to CYA on everything State and Local) is to go to your local Small Business Association (SBA) Office. They'll have everything you'll need to get started, and if they don't, they know where to get it.

Answer 5

you most likely will have to file and pay quarterly now, fed taxes (depends on how you structure the business), and all the social security of 15+% or so. You really need to get all of that set up with a CPA at first so you know how to comply with all the laws

Answer 6

You should find a good tax accountant. He or she will explain what taxes you are going to have to pay, give you some advice regarding tax minimization (such as what expenses you can deduct), and prepare your tax returns for you.

Answer 7

no.
they are self employed taxes and are a wide variety of things that you could declare as your expenses.

it really depends of what you do.

but pretty much you have to show your books (what you make and spend during the year)

Answer 8

If you are a billionaire, you don't have to pay any. You can thank George Warmonger Bush for that!

Answer 9

Seeing that you are such a queer . . you probably have to pay a pole tax. . . . you sick sausage yodeling spooge gargler. . . Ha Ha Ha ha ha.

Answer 10

NOTHING YOU NOT HAVE TO PAY ANY TAX.