Small Business, No employees TAX HELP?!?

Question

I just started a small business w/ no employees. I know that I am supposed to file a SCHEDULE SE and SCHEDULE C form attached to my 1040 but how often am I supposed to do this? I would also like determine approx. how much the taxes would be so I could put money away and not be over whelmed! Someone Please help! Thanks

Answer 1

Not only do you file the schedule C with your 1040 next year, you need to pay estimated taxes every quarter starting right now. You'll need to complete 1040ES now, and begin the estimated tax payment. Granted the form assumes you can estimate your earnings, which is tough for a new business, but you'll have to do the best you can. Think of it as putting money away, but with Uncle Sam.

Answer 2

Read the instructions for schedule C-EZ - depending on what your business is, you might be able to use that instead of the full schedule C - it's a lot shorter and simpler.

You need to keep good records of your income and related expenses. Those will go on the C (or, with luck, the C-EZ). The net from the C or C-EZ will go on the SE to calculate your self-employment tax. Then the numbers from the bottom of both schedules will transfer to the 1040.

Without knowing approximate numbers, it's hard to say what your tax will be. You'll pay regular income tax (including state and local, if your area has them) on the net income from your business - net is after subtracting the business expenses. Then you'll also pay 15.3% self-employment tax for social security and medicare.

Answer 3

You'll do that every year that you're self-employed.

As far as handling the tax bill, download the Form 1040-ES package from the IRS website. Use the worksheets to figure your estimated taxes and make the required quarterly estimated tax payments to the IRS. If your state has an income tax, they'll have similar procedures.