Making ends meet in a tough economy are leading many people to seeking new business opportunities and to becoming self employed. If you find that self employment is an avenue you'd like to pursue, choose something that you're your passion and talk with a bookkeeper or accountant to make sure you're on the right track with the IRS right from the beginning of your new endeavor. You will be responsible for saving for and paying your own self employment taxes to the IRS on quarterly basis so careful planning in the beginning stages is crucial to make certain you achieve tax relief if possible.
Self employment brings with it a unique set of circumstances for paying the IRS and taking care of payments to it. Being self employed can lead to your working at home, being an independent contractor on a job site, or it might be your only source of income and you rent office space from which to work.
You will be obligated to collect from, set aside and pay self employment taxes as well as making contributions to Social Security and Medicare taxes as well. When you're an employee, your employer takes care of all the withholding for IRS obligations on your behalf which is why your gross pay is always different from your net pay. When you're self employed or a business owner, you need to determine the amount of money that you owe the IRS and set it aside to make quarterly payments into the taxes you will owe.
An accountant will be able to work with you to determine the amount of taxes owed, he will also work with you to know what expenses can be written off as part of the expenses of running your own business. It is likely that you will be filing a Schedule C for your taxes and this is where your accountant will note your annual expenses. While not all of the expenses incurred during the time of your self employment can be written off, many can and you will want to offset your income if possible.
Making estimated quarterly payments on your income earned as a self employed individual will be crucial to your not being hit with tax penalties and interest at the end of the year. Even if you continue to hold down a full time job and your employer is holding taxes out of your paycheck, you could still be responsible for quarterly tax payment on the money you earn while self employed.
Self employment brings with it a unique set of circumstances for paying the IRS and taking care of payments to it. Being self employed can lead to your working at home, being an independent contractor on a job site, or it might be your only source of income and you rent office space from which to work.
You will be obligated to collect from, set aside and pay self employment taxes as well as making contributions to Social Security and Medicare taxes as well. When you're an employee, your employer takes care of all the withholding for IRS obligations on your behalf which is why your gross pay is always different from your net pay. When you're self employed or a business owner, you need to determine the amount of money that you owe the IRS and set it aside to make quarterly payments into the taxes you will owe.
An accountant will be able to work with you to determine the amount of taxes owed, he will also work with you to know what expenses can be written off as part of the expenses of running your own business. It is likely that you will be filing a Schedule C for your taxes and this is where your accountant will note your annual expenses. While not all of the expenses incurred during the time of your self employment can be written off, many can and you will want to offset your income if possible.
Making estimated quarterly payments on your income earned as a self employed individual will be crucial to your not being hit with tax penalties and interest at the end of the year. Even if you continue to hold down a full time job and your employer is holding taxes out of your paycheck, you could still be responsible for quarterly tax payment on the money you earn while self employed.
About the Author:
Seeking IRS tax help? Contact Guardian Tax Resolutions. The Guardian will help you resolve your tax issues and get you the piece of mind that you deserve.
No comments:
Post a Comment