Business Income Tax Software
Businesses aren't immune to taxes. All businesses must file an annual return. The only exception is a partnership which depending on how it is organized will need to file an information return. These are not like individual returns. These are paid quarterly not annually. The taxes are estimated based upon sales of reach quarter.
What determines if an entity is a business? If your company is a sole proprietorship, partnership, S corporation shareholder then that would mean you. Also if you expect to have any taxes of at least $1000 or more you will need to use form 1040-ES. IRS Publication 505 explains how to do your withholding and estimated taxes. All corporations with a minimum of $500 will pay taxes.
If you are a contract worker you may or may not be considered self-employed. If you get a salary or wage then you don't have to pay an estimated tax. Just make sure you receive a W-2 form from your employer. However, self-employed persons would be considered a sole-proprietorship and would need to figure out their estimated taxes. The self employment tax rate is currently 15.3 precent. This is made up of 12.4 percent for social security and 2.9 percent for medicare. Only the first $102,000 of earnings apply to social security. But all earnings do apply to medicare. One bonus is that one half of your self-employment tax can be counted towards your adjusted gross income. Any person that earns a minimum of $400 net (after fees and expenses) should pay the self-employment tax.
How do you determine if you're self-employed? You are considered a self- employed worker if you carry on a trade of business as a sole proprietor or independent contractor. Even a part-time business would qualify along with your spare time business and can claim taxes for it. All of the items that it takes to get your business operational would garner a tax break. Any training that you needed to get or certifications to start your business would also generate a tax deduction. Many of the basic expenses are tax breaks.
You just need to make sure that you do pay any estimated taxes for this business on time. You don't want to accumulate any penalties, fines or interest accrual.
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