Self Employment Information » Self- employment tax

Self Employment 401k Information

Jennifer Casono — Fri, 23 Jul 2010 06:11:37 +0000

One you engaged in your own business, you will be entitled to a Self Employed 401(k) plan and this is available for business owners, it’s considered as a retirement plan benefit or a retirement savings plan.

Once you qualify you will be provided loans that are tax free or tax break and you will have greater tax deduction claims. You should declare that you are self employed and the business must be registered, it may be a sole proprietor, partnership or a contractor or a corporation.

You need to check your eligibility for a 401(k) plan. There are firms who offer investment and will help you manage your 401(k) plan. You have to know the yearly contribution, you may choose a complete or partial contribution. It is good to take the advised of a financial consultant to help you find out more ways how you can invest on your money through a 401(k) plan. Once you started you have to monitor your 401(k) plan and bear in mind that all your effort done will be for your future.

The good thing about 401(k) plan is that you will have the chance of withdrawing the money temporarily. This is called 401k loan but you will not be provided the whole amount. You may use it for emergencies such as: medical emergencies, expenses for education, buying a new or first home, and other unavoidable needs. As if you are borrowing your own money and having interest on it. This is usually allowed by the government, incase these emergency occurs.

On the time that you started your self employed 401k plan, you should also know how to manage your savings wisely. You may try investing stocks, or different funds or bonds that will provide you good results in the future. Chances are you will be taking the risk.

5 Things to Know About Self Employment Tax

Jennifer Casono — Fri, 23 Jul 2010 03:39:45 +0000

You just decide to start your own business and as a self employed individual you still need to file taxes. The thing is, it would be a different filing procedure now, what are the things you need to know about self employment tax?

How to file self employment tax? If you have internet access simply go to www.irs.gov and all the necessary instruction will be provided to you on that site. Fill out the form and file Schedule C where you report your income for your business

How to determine self employed status? Since there are different categories to choose from for you to determine your self employed status, I do suggest that you complete an IRS form SS-8 and once submitted the government will help you decide. It will depend on the business that you have.

How to calculate self employment tax? You need to determine your net income first, all deductions must be taken. You need to obtain a Form 1099, by multiplying your net income by 92.35% it will give you the amount of the self employment tax. In any cases that your net income is below $400 you do not need to pay your taxes.

Requirements for paying self employment tax. You have to register your business first to file a self employment tax, have a business name and you must have a Social Security Number and Medicare.

How to claim self employed health insurance tax deduction? A s self employed you have the benefit of claiming a tax deduction through your health insurance, all you need to have is a health insurance plan name after the business and form 1040 to file this claim. This will serve as an adjustment to your gross income once you report the deduction

Who Pays Self Employment Tax

Admin — Tue, 20 Jul 2010 21:34:25 +0000

Self employment tax is the way an independent contractor pays Medicare payroll and Social Security taxes. In the part of employees, the employee and employer divide the cost of the said payroll taxes, wherein each of them will pay 7.65% of the eligible wages. On the other hand, in the case of an independent contractor, he or she is the employer and employee at the same time, therefore, a self-employed individual will pay both of the halves, or 15.3% overall.

But who really pays a self-employment tax?

Individuals who own an entity may be mandated to pay these taxes in the amount combined which was 15.3% of their total earnings. A sole proprietor is the one who will pay the self employment tax on both the loss and income of his sole proprietorship.

A general partner in a partnership will also pay self-employment tax on the payments that he will receive from the said partnership and his share with the loss and income of the said partnership. Meanwhile, a limited partner will only pay self-employment tax on the guaranteed payments that he will receive from the said partnership as a compensation for all the services that he rendered to the partnership.

On the other hand, the member of Limited Liability Company which is treated like an S corporation or partnership will be paying this self-employment tax depending on the guaranteed payments that he will receive from the LLC and also of his distributive share of the income and loss of the LLC in case he participates in its management. Meanwhile, those who do not participate in the LLC’s management will just pay the tax on the payments that he will receive as a compensation for what he has done for the LLC. All of these individuals are entitled to pay the self-employment tax.