• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Submissions
  • About Us
  • Contact Us
  • Jan 30, 2023
  • Startup
    • Creating a Plan
    • Funding a Startup
    • Franchise Center
    • Getting Your Office Ready
    • Making Your Business Official
    • Marketing Your New Business
    • Personal Readiness
  • Run & Grow
    • Customer Service
    • Human Resources
    • Innovation
    • Legal
    • Operations
    • Risk Management
  • Leadership
    • Best Practices
    • Communication
    • Green Initiatives
    • Open Culture
    • Strategic Planning
    • People Skills
  • Sales & Marketing
    • Advertising and Lead Generation
    • Marketing Innovations
    • Marketing Plans
    • Online Marketing
    • Relationships
    • Sales Activities
  • Finance
    • Budgeting and Personal Finance
    • Payments and Collections
    • Tax and Accounting
    • Pricing Strategy
    • Working with Investors
    • Working with Lenders
  • Tech
    • eCommerce
    • Hardware
    • Software
    • Security
    • Tech Reviews
    • Telecom
  • Shop

SmallBizClub

Helping You Succeed

taxbandits banner
Home / Finance / Tax and Accounting / Self-Employment: A Beginner’s Tax Guide
Self-Employment: A Beginner’s Tax Guide

Self-Employment: A Beginner’s Tax Guide

2364 Views

Feb 14, 2019 By 1800Accountant

Self-employed individuals have a unique set of tax circumstances, ones very different from those of employees. If you are starting your own business or are otherwise self-employed, there are a number of tax provisions you should be aware of. Here’s a beginner’s tax guide for self-employment.

Federal Self-Employment Taxes

If you were an employee previously, you no doubt paid into social security and Medicare by having what’s commonly called FICA (Federal Insurance Contributions Act) taxes deducted from your paycheck. Your employer would match those deductions to arrive at the full amount required by the IRS.

Now that you are self-employed, you need to pay not just the employee’s share but the employer’s share, too. These are collectively called self-employment taxes. The social security portion of the taxes (which equals 12.4 percent in 2018) is assessed up to a certain level of income ($128,400 in 2018). The Medicare portion in 2018 is assessed at 2.9 percent up to a certain level, rising to 3.8 percent after that—with the level depending on whether you are filing singly, jointly, or married filing separately.

Quarterly Estimated Federal Income Taxes

Since taxes aren’t being deducted from any regular paycheck, the IRS requires you to submit quarterly estimated income tax payments. This may be somewhat of a guess on your part, but it’s important that you make these payments if you believe you will owe more than $1,000 in taxes in any given year.

It’s also important to make payments equaling at least 90 percent of what you actually owe. That way you will avoid any penalties for underpayment. Typically, to be safe, you might make four equal payments totaling 100 percent of your previous year’s tax payments, unless you know you’re going to be making a lot more this year than last, or you have a big jump in income in any given quarter.

State & Local Taxes

Most states and many localities also require you to pay quarterly estimated income taxes. Don’t forget state sales tax on goods sold and services rendered, too. Check with your state treasurer to see what the statutes are in your state.

Additionally, many cities and other local governments want you to pony up for a payroll tax, business privilege tax, or any number of other business taxes. Your local taxing authority will be happy to help you make sure you’re paying all the taxes you need to.

Business Expenses

So that you’re not paying more in taxes than you owe, make sure that you’re aware of all the business expenses you can deduct from your income. If you have an office in your home, you can deduct a number of expenses, such as business equipment and supplies, repairs, and a portion of certain utilities and insurance. Be careful, though. The IRS has very specific rules for what does and doesn’t qualify as a home office.

You may also deduct expenses associated with your car or travel, advertising and marketing, and subscriptions and memberships to professional organizations, among others. To ensure that you’re getting all the deductions for which you’re eligible, you should consider consulting with a knowledgeable accountant.

Filed Under: Tax and Accounting Tagged With: Self Employed, Taxes

Source: 1800 Accountant

1800Accountant

1800Accountant

1800Accountant is a national accounting firm that assists small and new businesses in all 50 states, Canada, Australia and the UK. Our mission is to provide small businesses with affordable accounting and tax preparation services. Our experienced team of over 100 in house tax professionals is ready to start working for your business today. Call for a free consultation.

Related Posts

  • employers-face-stiff-affordable-health-care-act-excise-taxes5 Simple Tips Employers and Insurance Providers Need for 2023 ACA Reporting
  • Congress Hears From Small Businesses About Problems Caused By Wayfair
  • Understanding How Donations & Charitable Giving Reduce Business Taxes

Primary Sidebar

bottom line ad

Random

How to Decorate Your Email Signature in Gmail

Jan 27, 2023 By SmallBizClub

6 Ways To Optimize Work Schedules of Your Team Members

Jan 27, 2023 By SmallBizClub

Is Local SEO Worthwhile for Small Businesses?

Jan 26, 2023 By Annie Button

b2b-marketing-must-become-more-humanly-relevant

Building A Winning B2B Sales Enablement Strategy In 2023

Jan 25, 2023 By Michael Dunlop

employers-face-stiff-affordable-health-care-act-excise-taxes

5 Simple Tips Employers and Insurance Providers Need for 2023 ACA Reporting

Jan 25, 2023 By Stephanie Glanville

Footer

About Us

Small Biz Club is the premier destination for small business owners and entrepreneurs. To succeed in business, you have to constantly learn about new things, evaluate what you’re doing, and look for ways to improve—that’s what we’re here to help you do.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Copyright © 2023 by Tarkenton Institute, Inc. All Rights Reserved | Terms | Privacy