Starting your own business? Remember to pay your taxes!
Many small business owners start making a profit, take a salary, and then get a huge surprise when tax day rolls around. Most small business owners do not have a tax or accounting background, however, it is extremely important that you not neglect this side of your business. If as a self-employed person you are not taking employment taxes out of your paycheck each payperiod, you can be in for a shock when you complete your 1040 tax returns.
Employment taxes are actually two parts, the part that the employee sees taken out of his paycheck when he receives it and the part that the employer pays for each of his employees. If a person is considered self-employed, he mush pay both the employer and the employee portion of taxes. At the end of the year when he files his taxes, he will get a credit for a portion of the taxes he paid, however, if he hasn’t been making these payments throughout the year, he will have a huge bill to pay when he files his taxes.
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