‘Plan Ahead to Avoid Tax Time Surprises’ – Entrepreneur
Sujan Patel says, “Self-employment can be so liberating. Being an entrepreneur and launching your own business provides tremendous freedom that you just can’t get working for someone else.
At least until tax time arrives.
Entrepreneurs must take a totally different approach to taxes than the average worker. For example, when you work for someone else, your employer takes care of withholding taxes from your checks. But when you’re self-employed, that tax requirement falls squarely on yourshoulders.
For the uninitiated entrepreneur, not understanding these tax requirements could mean an unpleasant surprise at tax time. Follow these tips to help you plan ahead and avoid any last-minute tax time surprises.
1. Know your self-employment tax obligations.
As mentioned above, you have to pay self-employment tax if you work for yourself. That doesn’t apply just to individuals working alone or sole proprietors: Members of LLCs and business partnerships are also subject to a percentage-based self-employment tax. Part of this tax goes to Social Security and part to Medicare. This is in addition to individual income tax”.
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