I am thinking of starting a small in home business. I would only make about $15,000-$20,000 per year. How much would I have to pay to taxes on that? I know that I could keep my receipts and use those as deductables, but please dont include that in your answer, just let me know about how much I would have to pay out at the end of the year. Thanks yall!!
2007-08-16 01:30:22 · 8 answers · asked by Katie 2 in Business & Finance ➔ Taxes ➔ United States
Can anyone just give me an estimate on how much it will cost me...basically I am trying to find out if it is worth quitting my full time job for.
2007-08-16 01:38:25 · update #1
Worst case scenario: You make $20,000 net profit after all business deductions. You will pay 15.3% for Social Security and Medicare or $3,060. The remaining $16,940 will be your gross income for income tax purposes. If you are single and have no dependents and take the standard deduction of $8,750. That will leave $8,190 of taxable income. You will pay about $1,147.50 in federal income taxes.
2007-08-16 01:58:27 · answer #1 · answered by NGC6205 7 · 0⤊ 0⤋
First off, businesses (small or otherwise) pay taxes quarterly. That is, they figure what their taxes will be at the end of the year and send 1/4 of that in, adjusting as they go. At the end of the year they do the final calculations, including all deductions, and either send a check for the difference (representing their fourth quarter contribution) or demand a refund.
The below URL talks more about the rate; it's not a real straightforward answer (surprise, surprise)
Then there's sales tax to the state which is usually going to be monthly. Then there's the amounts paid to your state's labor board for unemployment insurance (even if you're self-employed, you still have one employee).
Been there, done that.
2007-08-16 09:12:44 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If your NET after subtracting expenses is $15,000, you'd pay a little over $2100 for self employment tax - this is for social security and medicare. If you net $20,000, self-employment tax would be a little over $2800.
You'll also pay income tax - the amount depends on many factors. If your filing status is single, you are not a dependent, and do not have any dependents, and don't itemize your deductions or have any adjustments to your income, it would be around $625 on a net income of $15,000, around $1300 on $20,000 for federal.
Depending on where you live, there might also be state income tax and possibly local.
Good luck.
2007-08-16 09:42:20 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
You'll pay self employment tax at 15.3% of the net profit, plus the regular income tax. It's not possible to say how much the income tax might be as it is based upon many factors not presented in your question. Age, marital status, number of dependents, other income, deductions, etc. all come into play.
2007-08-16 08:38:18 · answer #4 · answered by Bostonian In MO 7 · 0⤊ 0⤋
would the 15-20k be your next profit? If so, you would pay regular federal income tax (which would depend on your filing status, how many dependents you have, whether you itemize or take standard deduction), also, if you live in a state with a state income tax you would have to pay that as well. Since I don't know your other information I can't tell you regular federal income tax, or state income tax, but with being self-employed you would have to pay SE (self-employment) tax, which is 15.3% of 92.35% of net self-employment income. Since you are saying you would make 15 - 20k per year, I can give you a range for the SE tax. 15k would result in 2,119 in SE tax, and 20k would result in 2,826 in SE tax. This is provided of course that the 15k - 20k is net profit.
2007-08-16 09:18:29 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Assuming your are signal and no other deduction than your standard deduction and exemption deduction, and your income after expenses is $20,000.
You will pay social security and medicare taxes @15.3%, which is $3060.
You will pay income tax on:
$20,000 - standard deduction ($5150) - exemption deduction ($3300) - half of SS & medicare taxes ($1530), that is on $10,020. Your federal income tax will be around $1126.
Total taxes are around $4186 and the net with you will be around $15814.
2007-08-16 10:47:27 · answer #6 · answered by MukatA 6 · 0⤊ 0⤋
It is absolutely, beyond any doubt, impossible to answer your question since we do not know how much your expenses will be.
The start up years will be much different than subsequent years etc...
2007-08-16 08:34:57 · answer #7 · answered by Anonymous · 1⤊ 0⤋
you should save 20 persent for taxes
2007-08-16 08:35:09 · answer #8 · answered by randall m 2 · 0⤊ 1⤋