As the economy continues to remain unstable, there are more people leaving the work force and opting for self employment.
Although being in business for yourself can offer many advantages, there are many additional responsibilities and new expenses that you will have to be aware of.
One new area for you will be the self employed tax costs that are involved in running a business.
In order for you, the business owner to be prepared for these, the following are costs you should be aware of to help you stay prepared and assist you in effectively managing the finances of your business.
Among the self employed tax costs you will need to cover is the new self employment tax which will equal 15.
3% of whatever your net earnings were for a calendar year.
This is an amount that you will have to keep a track of and put aside per job, as it will be hard to determine an exact amount until the year is actually done.
In order to get an approximate of what you will need to pay, there are many websites that offer online calculators to help you come up with a close estimate.
If you want to play it safe, you might want to put a little extra aside so that you don't end up short.
Other costs that you will need to consider are retirement accounts that you have for yourself and also your employees if you have any.
These self employed tax costs are incurred throughout the year, and need to be regularly maintained to make sure you're putting in the right amounts.
If this sounds like a lot of work, there are payroll companies who can take care of this task for you and save you some time.
You will want to keep accurate records as you will have to fill out the appropriate tax forms during tax time.
The amount paid is usually deductible, so this will help minimize the taxes you may be responsible for.
When considering all the expenses you have to look after, self employed tax costs can be yet another responsibility that can cut into your profits.
To offset these costs, be sure to contact a certified accountant to see what deductions you are able to claim.
You never know what you can write off, so if you keep a track of your questions on hand so that you can present it to your tax person.
Also, plan ahead.
The more time you give yourself in advance to prepare for your taxes, the more time you will have to find a way to accurately allocate the costs.