If you have a small business like a sole proprietorship or an independent contractor, or you operate as Single Member LLC, you generally would consider yourself to be a self-employed.  For tax purposes, you must file IRS Schedule C, Profit or Loss From Business or Schedule C-EZ, Net Profit From Business with your individual income tax return Form 1040.  Here are some important facts for you to know:

If you are self-employed, your net earnings (after business deductions) are subject to Self-employment Tax. This tax consist of Social Security tax and Medicare tax.  Currently, for 2010, you would pay 15.3% of SE tax (subject to Social Security maximum cap).

Half of the SE Tax can be deducted above the line, meaning, this deduction reduces your AGI (Adjusted Gross Income)

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