Understanding Self-Employment Tax: A Guide to Calculating and Paying

[jrstephens]

How do we pay this? Do we just pay on what we show as profit or do we pay on it all?

 

[jwpamp]

You need to complete a Schedule SE. It is a form that you can submit throughout the year in quarterly payments (it is a pay as you go system).

However, if you haven't done that, at the end of the year, when you complete your Schedule SE, it will be figured into your Schedule C.

If you are employed by an individual employer, you are responsible for 7.5% and the employer is responsible for 7.5%, but when you are self-employed, you are responsible for the entire 15%.

It is based only on your profit.

Also, if you are doing a Computerized Tax Program, it should automatically fit it in when it detects that you have made more than $400 in Self-Employment income. (that is the amount that you must have in order to have to pay up!)

 

[Admin Greg]

The amount of taxes you pay as a business owner will depend on your specific circumstances, such as the type of business structure you have (sole proprietorship, partnership, corporation, etc.) and the tax laws in your country or state. Generally, businesses are required to pay taxes on their profits, also known as income tax. This means that you will be taxed on the money you make after deducting any business expenses. However, there may be other types of taxes that your business is required to pay, such as sales tax, payroll tax, or property tax. It is important to consult with a tax professional or accountant to determine your specific tax obligations and how to properly report and pay them.