The self-employed, the freelancers, the independent contractors, the small business owners: whatever your title, here is a guide to help you handle many of the tax considerations you’ll be up against in running a successful business.
Small Business Tax Forms
Entity Selection
Income
Tax Deductions
- General Business
- Retirement Plan
- Home Office
- Renting a Building
- Travel Expenses
- Meals & Entertainment
- Business Gifts
- Depreciation & Amortization
- Hiring Your Children
- Charitable Donations
- Hobby Loss Rules
- Time Donated
- Clients that Don’t Pay
Payments, Audits & Collections
Year End Strategies
And there is a lot to consider for those self employed. We hope our little tax guide will help you navigate the often times troublesome, sometimes murky tax requirements, the ins and outs, the et ceteras of tax laws.
The Self Employed Tax Guide attempts to provide small business owners and the self-employed with a one-stop resource to staying in compliance with the filing requirements and minimizing the financial burden imposed by several layers of government. We touch on a lot of subjects related to tax planning, such as charitable contributions, depreciation, deductions in business travel & entertainment expenses . . . Well, you’ll see.
And good luck with your enterprise, and good luck with your taxes. If you need any additional help, give us a call.
Frequently Asked Questions
What tax do I pay if self-employed?
You pay the self-employed tax rate of 15.3% (as of 2022). It’s a combination of 12.4% for social security and 2.9% for medicare. If you’re employed by someone, usually that amount is split between both parties (the employee and the employer), so you wind up paying 7.65%. This is one of the reasons, we recommend forming an S Corp. An S Corp allows you to assign yourself a reasonable income vs the total net earnings of your business.
Why is self-employment tax so high?
It’s less that it’s so high and more that the independently operating entrepreneur is in a tough spot. While someone employed pays half and their employer pays half. The entrepreneur is in a unique situation wherein they are both, the employer and the employed.
However, the other reason it’s so “high” is because you’re able to deduct many expenses. Health insurance, ordinary (and necessary) business expenses, not to mention part of your income if you’re an S Corp. It’s one of the reasons it’s important to have a plan going into your business.
Who is exempt from self-employment tax?
It’s a narrow bracket, but anyone who earns less than $400/year are exempt from the SE tax. This is part of the reason why the nebulous but sticking point of S Corps is in play, i.e. assigning yourself a “reasonable” salary.