Does anybody know roughly how much (percentage) I should set aside for taxes when I become self employed?

Question

...ok...those two answers are very different!

Answer 1

Assuming you are UK based, it is entirely dependent on the level of profits - please provide more info! But it is likely that much of it will be taxed at 22% of your profits (i.e. after business expenses). Do not forget, you must register for Class 2 & 4 self-employed NI contributions (unless you are below the de minimis limits) within 3 months of the end of the month you start the business.

http://www.businesslink.gov.uk is useful, particularly the beginner's guide to tax and accounts. There is useful guidance on basic account keeping which will help you determine roughly the correct amount of tax to set aside for your particular business.

Answer 2

It depends on how much you earn. It is possible, especially in the first couple of years of business, to show a loss on your tax return, which means you won't owe any income tax. And there are lots of ways to reduce what you owe, such as putting money into a retirement account and knowing what you can depreciate.

If you're earning income, and definitely not going to show a loss, then you may need to file a quarterly, or estimated, tax payment. The amount of this payment will depend, again, on how much you earn.

It is important that you talk to someone about this change in income. Or take the time to take an income tax class. Many tax prep firms offer classes, which you can take even if you're not looking to work for them. I know because I did this when I owned my own business. But this can be a complex situation if you're not used to dealing with it, so you're going to have to learn to deal with it, or find someone who can guide you.

I've attached some IRS publications you might find helpful. Good Luck in your new business, and don't get discouraged in the beginning - sometimes it takes time!

Answer 3

It depends on how much you expect to net for the year. In any case, if you have net income at all from the business, you'll have to pay both the employer and the employee half of the social security tax. This is something like 15.7%, and is in addition to whatever income tax you owe to the feds, state, and local. Federal income tax depends on how much you make, and state and local depend on the laws of those entities. If you make any decent money at all from your business, you probably will pay at least a third, maybe more. This is based on net, which means after expenses are deducted. A CPA can be very helpful in telling you what deductions you can take - he or she will very likely save you more than their fee.

You will have to file quarterly estimated taxes to the IRS, and very likely to the state, and maybe city or municipality also.

Answer 4

28% Fed is a secure variety. bear in mind that the 28% fee in basic terms kicks in above a undeniable earnings point - seem at a 2006 tax table and notice for your self, and which you're taxed at 0% and 15% brackets alongside the way. So in the adventure that your earnings ought to upward push to the place you pay better than 28% on your very final money earned for the three hundred and sixty 5 days, the decrease brackets ought to conceal you. in the adventure that your earnings is that top, however, you will ought to document quarterly returns and pay taxes quarterly. I forgot to point the self employment tax, that's around 12.5%. sturdy success with the consulting.

Answer 5

A good rule of thumb is to save at least 20% of your income.

But if you really want to know get the tax book from the IRS to see how much you have to pay just use the income tax schedule at the back of the book.

Answer 6

For your federal taxes (you may also have state & local taxes to pay):

A good rule of thumb is 25% of your net income (gross less your expenses). You should not just set it aside. You need to send it in quarterly using quarterly estimate forms (1040 ES, find at www.irs.gov, due 4/15, 6/15, 9/15, 1/15)). If you owe more than $1000 (generally) at the end of the year you will also have to pay interest & penalties for not sending in quarterly estimates.

Answer 7

This depends on what you mean by "taxes". For personal income taxes figure about 34% for state & federal. If you mean business taxes if you're incorporated, that depends on your state, but 20% should cover it in most cases.

Answer 8

i would say about 25% would be a good start, cause if you owe more then it won't be hard to come up with the extra money to pay. And if to save to much then good for you in making a profit.. so good luck.....

Answer 9

18%

Answer 10

I was told 20% when I was helping my daughter