Do you pay less taxes if you are self employed?

Answer 1

Depends. As this is in Aus & NZ taxes so I am assuming that you are in one or the other. I am not familiar with NZ taxes but they would be similar to Australia which is what I am basing the answer on.
Everyone pays the same rate of tax on their taxable income there are no concessions so in that sense- no you do not pay less tax.
However self employed people generally incur more expenses in earning their income- fuel, tools, business cards, safety equipment, advertising etc and those business expenses are deductible. The deductions reduce their taxable income and therefore reduce their tax. Paying lower tax is really a bit of an illusion because the reality is that deductions are based on actual out of pocket expenses so the more of them that you have=the less money (profit) is going in your pocket. For example compared an ordinary salary and wage earner with a self employed person and both had an income of $50,000, the office guy has virtually no costs so the entire $50,000 is taxable income (profit) of their employment but on the other hand the Self employed person may have had to spend $20,000 on materials/tools/fuel etc and in effect have only made $30,000 taxable ijncome (profit) from their employment. Of course less tax is paid on the 30,000 and while they both started with $50,000, one will end up paying a lot less tax than the other but it is only because the reality is that they made a lot less money than the other.

Answer 2

I assume you're an aussie, as i was looking through aust questions.. If you're not, i don't know how the tax system works in your part of the world.

Everybody pays tax at the same rate, based on their income. So the simple answer is no.

Often with many self employed people though, they can claim more expenses on their tax, which reduces their taxable income, hence lowering their tax bill.

Hope that makes sense.

Answer 3

NO but maybe...

you pay more (in the US)
you pay a self employment tax of 15 percent which is
the 7.5 everyone pays PLUS the 7.5 the employer contributes
for social security. This is ONTOP of regular income tax
which is the same!

The plus is you get to writeoff alot more self empl so
you may end up paying less in the end

Answer 4

LIE, either don't report all income OR make up extra expenses