Being self-employed can be extremely satisfying and rewarding, but it also comes with its challenges. Dealing with taxes is one of them! If you work for yourself, it’s important to make sure you know about your tax-related responsibilities.
Income Tax Payments
When you are employed by someone else you don’t have to think too much about withholding income taxes throughout the year. Your employer does that for you and pays that money to the IRS on a regular basis. You just file your own tax return and call it good.
When you are self-employed, though, there’s no one else in the picture making those regular income tax payments for you. As a self-employed individual, you are responsible for making income tax payments directly to the IRS on a quarterly basis. If you get behind on those, the IRS hit you with some pretty heavy penalties down the line!
Another big difference between being self-employed versus having an outside employer: self-employed folks have to pay what’s known as the self-employment tax. This isn’t an extra tax that self-employed individuals have to pay—it’s just a different way of making sure that everyone is paying into the Social Security and Medicare systems.
When you’re self-employed, you don’t have an employer withholding those Social Security and Medicare taxes for you; you have to pay them on your own. As with your income tax, you are required to pay self-employment tax quarterly.
Self-Employed Tax Help
If you are self-employed and feel a bit overwhelmed dealing with these tax logistics, take heart! Taxation Solutions, Inc. is available in Charlotte to help with tax planning and preparation so you can stay on track with your business and with your obligations to the IRS. Call our team today for all of your self-employment tax needs!