well i recently embarked into the realm of sub’n and i’m gonna be getting some 1099’s does anyone here know what the tax rates are? i mean i know that social security is around 16% for sole proprietors and what another 15% for self employment tax?
The more you make…the more you pay. For yourself you will either make quarterly estimated payments or get clobbered at the end of the yaer.
but what would you say altogether i should have aside about 30% with self employment tax and social security? thanks for the reply
The first thing you need to do as soon as you read this…is run out (don’t walk)…and find an accountant. This is your most important tool being in business. You can be the best , most knowledgeable roofer in the world…but if you don’t have a handle on your business, you wont be in business. This service will be the best money you ever spent.
As an employer, you match the employees SS and medicare deductions of 7.65%, and as a self employed individual, you cover the entire 15.3% for yourself.
Then there are State and Federal tax withholdings. If you earn in excess of your states benchmark without paying periodically and on time, the late fees, penalties and interest will gobble you up.
You need an accountant to advise you and to initially make all of these reports for you and tell you how much to withhold and pay on time to which agency.