2006-11-23 06:45:33 · 5 answers · asked by Joseph D 1 in Business & Finance ➔ Taxes ➔ United States
First off congratulates and best of luck on your new self employment.
Figure out how much you need to pay your self. i would at first figure out as low as you can go. the reason for this is it is better to have to make a small cake with a lot of icing verse a large cake with a thin layer of icing.
A good rule of thumb is 25% of what you take home. It would be best to put your self on a salary and include taxes in your cost of labor.
Hear are some number a subcontractor of mine uses. labor cost of 43k per year with a take home of 30k and a taxes of 13k for the year.
Also since you are self employed you can dump money or business profit at the end of the year in to a 401k solo. Yep you can control your income with out slowing down. and can change the numbers as you go along.
Hope this helps.
2006-11-23 07:53:36 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Your income taxes will depend on how much you make from your business, and also on your marital status (and spouse's income, if applicable), number of dependents, and what adjustments or itemized deductions you have. But you'll have to pay self-employment taxes of 15.3% on your net from your business after deducting business expenses - this is for social security and medicare - in addition to income taxes. The income tax and self-employment taxes must be paid to the IRS quarterly.
If you put aside 30% of your income, you should be fairly safe unless you make a huge amount of money or you have a spouse with a high income, then might need more. And if you're married and have dependent children, you might not need even that much.
You might also be liable for state and/or local income or other taxes also, depending on where you live.
Good luck on your business.
2006-11-23 08:04:49 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
Congrats !!
When we started out business the first big mistake we made was NOT getting an accountant ! Only took two years to realize what a load of money this accountant could save us !!
Do yourself a huge favor and hire an accountant for tax time,... Always have people smarter than you working for you.
If you put aside 30% for tax time, you will not have any surprises. If you go to an accountant for tax prep, one who learns all the new ways self employed people can cut taxes every year, you will be surprised on what they can save you !! Yes even if you have no employees... still seek out someone smarter than you when it comes to your taxes... AVOIDING TAXES is heaven... evading is hell !
2006-11-23 09:00:42 · answer #3 · answered by Kitty 6 · 0⤊ 0⤋
about 10% percent of your wages to be safe...that would be about 2000$ if u make 20000 if u can't afford that then at least 1000$ and that's prolly pushing it u culd end up owing if you don't have a lot of expenses with ur self employed job.
2016-03-29 06:52:25 · answer #4 · answered by Anonymous · 0⤊ 0⤋
20% always! Just to be safe...
2006-11-23 17:12:45 · answer #5 · answered by Anonymous · 0⤊ 0⤋