Feb 25

New Series- Self Employed #Taxtips

Personal Finance, Small Business, Tax Tips, self-employed accountant, brian greenberg, business taxes, cherry hill, cpa, government, greenberg and associates, marlton, money, new jersey, nj, self-employed, small business owner, south jersey, taxes Add Comment (1)

Tax Tip #1

You can’t keep every dime you make

The biggest mistake that a self-employed person can make is to forget that you have some interested, silent partners. These partners consist of the IRS, the state government where you live, the state government where you earn your income, and possibly the local town and/or county that you work and/or reside in, as well. All of these municipalities have a vested interest in your business. Until all your expenses are calculated it’s hard to figure how much you owe. As a rule of thumb for someone starting out assume a federal tax rate of 20%, about 13% for social security taxes (both are paid with your 1040 return) and 7% for state and local taxes. If you don’t share your profits with these interested partners, they won’t stay silent for long!

Financial tip: Put 40% of every dollar you earn into a separate bank account, which you will need to pay your taxes. This will help you to keep your silent partners silent!