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tax by having income tax withheld from your pay, you might have to pay estimated tax. Individuals, including sole proprietors, partners and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.
When you work for yourself and don't have social security and Medicare taxes withheld from your salary by a full- or part-time job, you must pay taxes on income by making regular payments of estimated tax during the year. These payments contribute to your coverage under the social security system. Generally, you must pay self-employment tax and file Schedule SE if:
If you have employees, you have employment tax responsibilities. You must pay them and there are forms you must file. Employment taxes include:
You must pay excise tax and file forms if you:
These are just the federal taxes. You may also have to work with state taxing authorities. Also, most states have a state sales tax and even local sales taxes within states, and correctly calculating those can be a chore. As a business owner, understanding your tax requirements will help you file your taxes and make payments on time. Your best bet is to work closely with a qualified professional.
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Travis Raml, CPA