Someone Posted Something That Made Me Think...(We Were Talking About

[babywings76]

Someone posted something that made me think...(We were talking about whether or not to make a purchase on my own that will boost my sales and I'll earn the commission on, or just pay the discounted price as a consultant) She mentioned needing to remember that we have to pay taxes on our commissions.

So....How much do you set aside to pay taxes on what you've earned with PC? I thought that with all the write offs, postage, gas, some groceries, supplies, etc, that I wouldn't really end up paying taxes. Is there a certain percentage that we should be expecting to pay? Is there a way to figure it out before tax time?

 

[koima]

Re: taxesI'm new to PC so I can't say about PC specifically, but my husband has a small business, now incorporated but a sole proprietorship for many years, so I have some experience with small business taxes.

We have a separate bank account just for taxes and put 15% in that account. At the end of the year, that covers the taxes (corporate, sales tax, etc. but not personal - they're taken out of salary now) and some years we have a little left over. It's not a bad habit to get into now. If you don't end up using it to pay taxes, you have a nice little savings at the end of the year.

 

[pamperedpnina]

Re: taxesI work for myself, teaching horseback riding. I was told by someone cant remember who to put 30% away b/c you have to pay Tax, Social Security and some other thing... So thats what I've been doing this year. In the past my expenses always were more then I made so my tax was next to nothing but this year Thank G-d we are doing better. Also when you own your own buisness you need to turn a profit in a certain amount of years or they consider it a hobby!!! I will probably find myself an accountant/CPA for this or next year b/c its getting to complicated for me!

 

[DebbieJ]

Re: taxesI set aside 25% after expenses.

 

[Becky0216]

Re: taxeswhat if you claim a loss with PC? I was thinking I might not have to pay in. Guess it is time to call the tax people.

 

[Cassie1037]

Re: taxes

I work for myself, teaching horseback riding. I was told by someone cant remember who to put 30% away b/c you have to pay Tax, Social Security and some other thing... So thats what I've been doing this year. In the past my expenses always were more then I made so my tax was next to nothing but this year Thank G-d we are doing better. Also when you own your own buisness you need to turn a profit in a certain amount of years or they consider it a hobby!!! I will probably find myself an accountant/CPA for this or next year b/c its getting to complicated for me!

The theory that: if you claim losses three out of five years, the IRS will assume your business is a hobby.... is a myth. The truth is that if you have income in 3 out of 5 years, you are a business.

 

[chefsteph07]

Re: taxesI file jointly w/ my dh and I usually end up breaking even after it's all said and done, I don't set anything aside for taxes.

 

[Sheila]

Re: taxesSince it's your first year and you have invested money to try and start your business, there's a good chance that you will even out and break even or maybe even show a loss.

You will need to do a Schedule C with your tax return. To get a copy of the Schedule C and instructions on what type of info you will need to provide the IRS (or the person who prepares your taxes) click here.

I agree that in the future you should plan to put back 30-33% in a seperate account. If you need it, then you don't have to panic come tax time. If you don't need all of it, you have yourself a nice little savings account that you can use for kit enhancement month -or- doing something like taking a family vacation.