Even if you are your own boss and you have no care about long commutes and office politics, you are still not free from paying taxes. This self-employment tax is being paid by those who earn at least $400 in the net profit as a sole-proprietor or independent contractor or as partner in a certain partnership. If your business is not yet incorporated, your net business income will still be subjected to a self-employment tax. You are also required to pay these self-employment taxes with your self-employment income even if you are already retired and are already receiving benefits from Social Security.

The self-employment tax rate is 15.3%, with 12.4% of it for the Social Security system and the remaining 2.9% is for the Medicare. But being a self-employed individual means that you have both the burden of being the employee and employer.

In calculating the self-employment tax, you will use the Schedule C or C-EZ in figuring the net earnings. The Schedule SE is the one used in computing and reporting self-employment taxes.

But when are self-employment taxes due? Usually, the filing of estimated tax is due in the 15th of the months of April, June, September and January, with the exception when it falls on a holiday or weekend.

These taxes are considered as the life line of any government. If people know how to pay their taxes responsibly, you can also expect that the services of the government will also be of the top quality. Always be sure that you know when self employment taxes due are so that you can help in the improvement of the economy of your state or country.

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.

The first step is to know what your self-employment net income is. Net income typically refers to business receipts less your business deductions. The second thing that you must do is to multiply your self-employment net income by 0.9235 or 92.35%. The product will be your “net earnings” from your self-employment. In case the answer is lesser than $400, there will be no need for you to pay a tax for self-employment.

In step three, if your net income is $76,200 or less, you will multiply it with 0.153 or 15.3%. If it is more than $76,200, you will multiply it with 0.029 or 2.9%. Add the two answers and it will be your corresponding self-employment tax.

In the fourth step, you will have to factor your deductions. To determine your adjusted gross income, you will deduct your self-employment tax. You will be doing this in 1040’s Adjustments section. Things that are not covered by self-employment tax include dividends, interest, rental income, capital gains, pensions and other unearned incomes. And after you have done all of these, the last step is for you to report your computed self-employment tax on 1040’s Schedule SE.

Calculating your self-employment tax is also very important. This way, you will know what you need to pay and you can already set aside the money for this particular payable. Budgeting your money will also be a lot easier when you know how much you will use for taxes and how much will be allotted for your family’s needs.