Taxes are paid differently when you own a small business than personal taxes. You may use different forms and depending on how in depth you need to go, you may need to hire an accountant to do them.

This article will show you some of the different things that are required for small business taxes. Please remember these are only meant to help you. If you have questions or want to make sure you have done it correctly, please contact your local accountant or contact the IRS.

When you work for yourself you need to pay Social Security and Medicare taxes. This is called self-employment tax. You can use a Form 1040 to help figure out how much you need to pay. The government has set up percentages for Social Security and Medicare. These rules and laws could change from year to year, so you will want to make sure you go to irs.gov to get the latest information.

You must use either a tax id number or your social security number when you file these taxes. The government will issue these if you do not have one or both of them.

You must pay self employment taxes if you make over $400 in a year. If you make under $400 you don’t have to claim it on your taxes. This amount is your gross earnings. The taxes are based off of the amount you earned for the year.

Some may think if you work your business part-time that you don’t have to claim it. This is a myth. You are considered self employed if you make any amount of money whether you worked the business full time or part time. If you do things for people or people purchase things from you and you make money, you are self employed unless it was a one time thing and you never do it again.

When you pay your taxes, you can do it quarterly or yearly. If you make a large amount of money you should consider filing quarterly. If you don’t, or you can save diligently, you can put an estimated amount in a savings account. When you file your taxes at the end of the year, you will have that money and hopefully it will be enough to cover the whole amount.

There are several types of business structures that may change the way and the amount that you file for taxes. It will also determine the form you will need to use when you file. There is a sole proprietorship, partnerships, corporations, s corps, and limited liability companies. There are websites that will help you determine which structure is right for you. You may also want to contact an accountant or attorney to help you with this determination.

Keeping receipts and all important documents is another important thing with your business. You need to keep receipts for every item purchased whether it was a tablet of paper or advertising in a newspaper. These are items you will be able to add to the forms and you will need the receipts as back up to the form.

When you are first starting your home business, it’s a good idea to decide how you are going to file your taxes. Visiting a website like irs.gov is one way to get all the information you will need. Another way is to contact an accountant or lawyer. Paying taxes is a must when you are self employed. Filing right from the beginning will be a benefit to you in the long run.

posted by Chris Simpson