Working for yourself can be exhilarating, profitable, and frightening
all at once. If you are new to self-employment, you may have questions
regarding the proper procedures to follow and how to plan for
deductions. The accountants at Whyte & Associates in Rancho
Cucamonga can set your mind at ease with sound tax advice.
One of the primary questions for contractors, freelancers,
and other self-employed individuals is, “What is self-employment tax?”
This tax is separate from any others. In the normal employment model,
the employer withholds a certain amount of your salary for Medicare and
Social Security. The employer also pays a portion of the total, which is
15.3% of your total income. When you are your own boss, you are
responsible for the total amount.
Because there are so many different models of
self-employment, it may be somewhat difficult to determine how you
should identify yourself on your tax return, by your social security
number or with a Federal Employee Tax ID (FEIN). To determine the
appropriate term, it helps to know how one differs from the other. Both
the SSN and FEIN are used as an identifier for tax purposes. The FEIN is
more applicable to corporations than personal use. If you own a
business but have no partners or employees, you may be able to file
taxes using only your SSN.
If you provide a service to a business, chances are you will
be asked to fill out a W-9 tax form. The purpose of this form is to
supply your client with your tax information, which they will need to
complete the necessary 1099-MISC form when they file their business
taxes. Any company that pays a contractor more than $600 in a year must
report the total amount paid.
Taxation is a complex issue that can cause you undue stress. It is possible to come out on top, secure your financial future, and obtain peace of mind by consulting a professional tax accountant. The accountants at Whyte & Associates have been providing assistance to individuals, families, and businesses throughout Southern California for many years. We can help you maximize your deductions and minimize your annual payout with sound tax strategies.
Schedule a consultation at (909) 575-0080.
