Tax Rules Benefits For The Self Employed

Tax Rules & Benefits For the​ Self-Employed
Who hasn’t dreamed of​ quitting their day job,​ starting their own company,​ and living happily ever after? Abrasive bosses and questionable decisions can make a​ normal nine to​ five job grow stale pretty fast .​
Today,​ more people than ever are enjoying the​ freedom that comes with starting a​ small business and being their own boss,​ but what about the​ taxes? How much should you​ pay,​ and how often? What can you​ claim as​ business expenses? What can be deducted?
One good thing about those regular,​ nine to​ five jobs is​ that they take care of​ tax payments for you​ by withholding them from your paycheck .​
If you​ start up a​ small business of​ your own,​ you​ will be responsible for withholding your own taxes and paying them on​ a​ different schedule.
Sole proprietorships,​ the​ category which many small businesses fall under when they are created,​ have relatively simple tax rules .​
The sole proprietor pays estimated taxes four times a​ year .​
If they fail to​ pay quarterly,​ they will be penalized at​ tax time,​ to​ the​ tune of​ 8% of​ their annual income .​
Those who fail to​ pay their taxes at​ all can expect the​ IRS to​ come knocking – literally or​ figuratively,​ depending on​ how much they neglected to​ pay .​
To avoid the​ dreaded audit,​ make sure to​ keep meticulous records of​ your income and business expenses,​ and pay your taxes on​ time .​
Tax payment coupons can be printed from popular tax software programs,​ or​ downloaded from the​ IRS web site.
This is​ more inconvenient than having your taxes withheld from the​ get-go,​ but small businesses also get special tax benefits that you​ won’t enjoy as​ someone else’s employee .​
If you​ do most of​ your work from home,​ you​ can claim a​ deduction for your home office,​ including the​ depreciation on​ the​ space .​
Remember,​ a​ home office doesn’t have to​ be an​ entire room .​
Part of​ a​ room will suffice .​
Rent can also be claimed as​ a​ business expense .​
The forms can be confusing,​ though,​ so be sure to​ read them carefully and enlist a​ tax professional if​ you​ need help.
Self-employed workers can also write off business equipment purchases as​ tax deductions,​ to​ a​ maximum of​ $18,​500 per year .​
If you​ need a​ better computer to​ keep up with your business needs,​ you​ can feel good about buying one,​ because it​ counts as​ a​ valid business expense .​
Contributions to​ retirement plans are also deductible .​
And don’t forget the​ expenses you​ incur from marketing,​ advertising,​ and promoting your business .​
Gasoline and auto repairs can be deducted if​ you​ use your car for your business or​ if​ you​ have a​ company-owned vehicle .​
Office supplies are another deduction.
Other,​ less tangible expenses can be used as​ tax deductions .​
These include the​ interest and fees from carrying credit card debt on​ business expenses .​
This area gets tricky,​ though,​ so I​ recommend hiring a​ professional to​ help you​ wade through the​ forms and procedures.
Tax rules get a​ little more confusing when you​ hire employees .​
a​ husband and wife can work together and maintain a​ sole proprietorship,​ but if​ you​ hire an​ outside employee,​ you’ll need to​ apply for a​ tax identification number from the​ IRS .​
Then you​ will be responsible for keeping records for each employee,​ withholding the​ appropriate amount of​ tax from their wages,​ and paying it​ to​ the​ government .​
The good news is​ that you​ can deduct the​ employment taxes you​ pay.
To find out more about the​ tax rules and tax benefits that apply to​ you,​ take a​ look at​ the​ IRS web site .​
Other great resources exist online .​
All you​ need to​ do is​ a​ little research to​ avoid getting caught up in​ a​ tangle of​ tax trouble.
Tax Rules Benefits For The Self Employed Tax Rules Benefits For The Self Employed Reviewed by Henda Yesti on July 02, 2018 Rating: 5

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