If you own your own business and are considered self-employed, there are certain obligations which need to be met so that you file your taxes properly and promptly. There are often questions that are asked by self-employed individuals in regards to their tax obligation. The following FAQs will provide you with the answers to the most common questions. You can also contact Tax Force Inc for additional information about any specific questions that you may have.
Q: Am I self-employed?
A: You are considered to be self-employed if you are an independent contractor, sole proprietor or a member of a partnership in any business or trade. Even if you are operating a part-time business, you can be considered self-employed.
Q: What are my tax obligations as a self-employed individual?
A: You will need to file an annual tax return but you may also need to pay quarterly taxes that are estimated. In addition, a self-employment tax needs to be paid which covers Medicare and Social Security for individuals who work for themselves. You must compute your net profit and loss to determine if it is necessary to pay income tax and self-employment tax. The experts at Tax Force Incorporated can assist you with this process.
Q: How are quarterly payments made?
A: Form 1040-ES is necessary to determine if you must pay Medicare and Social Security taxes. There is a worksheet on that form which is similar to what is available on form 1040. When using that worksheet, you will be able to determine if it is necessary to pay the estimated quarterly tax.
Q: How is my annual return filed?
A: Typically, the annual return for a self-employed individual is either Schedule C or Schedule C-EZ, in the case of small businesses that have expenses of less than $5000. Schedule SE will be used to report your Medicare and Social Security taxes.
Q: Do I need to file an information return?
A: Although it depends upon each individual case, it is likely that you will need to file an information return with the IRS.
Q: What can I take for a home office deduction?
A: When you own your own business and use part of your home exclusively for that business, you can deduct expenses on your taxes. This is true for both homeowners and renters.
Q: Which Business Structure Should I Consider?
A: There are a number of different types of business structures available, each which has its own benefits and limitations. The most common types of businesses are Sole Proprietorship, Corporations, S Corporation, Limited Liability Companies and Partnerships.
Q: Can I start a joint venture with my spouse?
A: There may be different tax regulations when a husband and wife start a business together. It is best if you contact a tax professional for assistance in this regard.
Q: Where can I find answers to other questions?
A: If you have any tax questions or would like assistance in filing your taxes properly, you can contact the professionals at Bhuiyan cpa. We would be happy to assist you with any questions that you may have.