Estimating taxes?

Question

I'm starting a sole proprietorship, but was wondering if there's a way for me to know how much money to hold back each month so that I don't have a huge tax bill at the end of the year? Or a way to pay a little in each month?

Answer 1

This link will take you to the form on which estimated taxes are calculated. If you can figure out the form you will have your answer. If you find the form difficult I would strongly suggest that you seek help from a tax professional. This can be complex issue for which this forum may not provide the space to properly address your question.

Answer 2

You should be making quarterly payments. If your total tax at the end of the year will be over $1000 you are required to. You'll use a form 1040ES for that.

Your income tax will depend on your total income, and you don't indicate how much you expect that to be so there's no way to estimate the tax. In addition, there will be self-employment tax of around 15%, for social security and medicare.

Taxes are on your net income from your business - what you take in, minus expenses.

Answer 3

Here is the form. To compute your income for self employment tax, multiply your estimated profit by 92.35% then figure your self employment tax. Reduce your income by half of that.

Non tax suggestion: Use a pencil, not a pen.