Self-employed, Sole-proprietor and Single Member LLC
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)
Because you are a self-employed, you generally have to make estimated quarterly tax payments on the 4th, 6th, 9th, and 12th month of the calendar year to the IRS and your State government (if applicable). If you don’t make quarterly payments as required, you may be subject to tax penalties.
You are allowed to deduct ordinary and necessary business expenses. This is the costs of operating and running your business.Business Tax ArticlesThis article was written by TaxBizPro, LLC 2020, all rights reserved ©.
IRS Circular 230 Legend: Any advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax payments or penalties. Unless otherwise specifically indicated, you should assume that any statement in this website or articles that relating to any U.S. federal, state, or local tax matter was written in connection with the promotion or marketing. Disclaimer: Any articles herein is designed for general information only. The information presented at this site should not be construed to be formal legal or tax advice. Each taxpayer should seek advice based on the taxpayer's particular circumstances.