Tag: Self-Employment Tax
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Owner’s Draw in Business
When an owner of a small business operation transfers money from the business bank account to their personal bank account the transaction is commonly referred to as a ‘Draw’. There are other terms but this is the traditional word used. The technical definition is: ‘A transfer of earnings from the business on behalf of the owner…
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Mobile Food Vending – Profitability and Issues
Many of you are wondering if you can make a good living as a mobile food vendor. If there is profit, how much?
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Estimated Tax Payments – Why and How
In the normal taxpayer relationship with the Internal Revenue Service, the taxpayer is an employee and via withholding, taxes are paid the U.S. Government by the employer. Basically the employer pays the tax after each payroll run on behalf of all the employees and the corresponding mandated matching taxes (Social Security and Medicare). But in the small…
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Limited Liability Company – Introduction to Basic Principles
The Limited Liability Company or LLC is really a fusion of two forms of business entity status. Each has unique positive attributes and legal protections.
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Booth Rental – Legal and IRS Compliance
A long standing custom in the hair salon industry is owners of salons leasing out booths to hair stylists. If not properly documented and exercised appropriately, the owner opens the door for many legal issues. Booth rental has both legal and IRS compliance issues that need to be addressed. Booth rental is legal in many states but…
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Real Estate Agent – Drawbacks and Delusions
The highest prized benefit of owning your own business is independence. You rely on your skills and have to report to no one but yourself. This is the allure of becoming a real estate agent.
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Phantom Income
Those small businesses using partnership or S-Corporation formats issue Form K-1 to the respective owners. When income is assigned to the owner and there is no corresponding cash related to that income, then this income is referred to as ‘Phantom Income’. In effect, it is assigned income for tax purposes without the corresponding cash to pay…
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How Much is a Fair Profit? Part I of V – Owner Compensation
A fair profit for a small business is between 9% and 37%.
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Form 941 – The Basics
Form 941 is the employer’s quarterly federal tax return. It reports how much federal income taxes were withheld; Social Security taxes and Medicare taxes that are due and how much was paid in deposits to the Internal Revenue Service. The report is filed every three months for each of the four calendar quarters.
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Self-Employment Tax: You Can Stop Staring At Me Now!
Simply put, this is a tax on your net earnings from your small business operation. If you are unincorporated, you have to pay this tax. This includes those in partnership arrangements, and in any form of Limited Liability Company status. Why don’t corporations pay the tax? Actually they do, it’s just called a different name.