Understanding Self Employment Taxes and Rates
Written by Eddy Hood
Running your own business or working as an independent contractor can be difficult. It often means juggling several clients and projects, and not mention the financial aspects of your business. Instead of having a department to handle one aspect of a business, you are in charge of everything yourself, including your taxes. You may be worried about self-employment tax rates and how to determine what to pay and when. It can be very helpful to have someone who can walk you through your tax situation. An accountant can help you determine how much you need to pay in self-employed taxes each quarter. At Ignite Spot, we specialize in helping small business owners handle all of their bookkeeping and accounting needs. We can help you with your tax situation.
When you are self-employed, you need to pay self-employment taxes in addition to your income taxes. You may be wondering exactly what is self-employment tax. This tax covers both the employer contribution and the individual contribution for the Social Security and Medicare taxes. The tax payment is in addition to what you would pay on your income taxes, and it is important to include it in your planning.
The IRS guidelines state that you must pay self-employment taxes if you earned more than $400.00 a year from being self-employed. You may also be wondering how much self-employment tax is each year. You need to pay 15.3 percent in additional to your income tax rate. If you were working for a business as an employee, they would pay half of this, and the other half would be withheld from your check. Paying this tax qualifies you for Social Security and Medicare benefits when you reach retirement age. It is not an optional tax.
The self-employment tax rates have remained the same over several years. As you plan out your finances each year, we can help you determine how much you need to pay as your quarterly tax payments. At Ignite Spot, we understand how stressful it can be to determine the amount you need to pay and when. We can help you with your self-employed taxes, as well as other accounting needs that you your business has. This can free up additional time for you to grow your business and prevent you from worrying that you may have made a mistake with your books.
At Ignite Spot, we offer small business tax help, in addition to our financial reporting services. We understand first hand just how busy you are as a small business owner. Our accounting and bookkeeping services will allow you to focus on your business and free up your time from the paperwork and complicated tax forms and reporting. It makes sense to have these services outsourced, because you will not need to pay an additional person. Plus we can handle everything online. You can download a report when you need it. Our firm is made up of certified accounts ready to help you. Contact us today.
Learn More About Our Tax Services
- What is the Federal Unemployment Tax Act (FUTA)?
- How to File Self Employment Taxes
- Tax Implications of The Affordable Care Act on Small Businesses
- The Guide to Small Business Tax Preparation and Deductions
- How to File Small Businesss Taxes
- Self Employment Tax Deductions
- What is a Tax Write-Off?
- Small Business Tax Write-Offs