Are you saving money for taxes?

I have no income last year.. I just started to get paid from July

42% is not Enough ?

 

It depends on your total income, so there is no way to say X is enough unless you know what your net income will be for the year. There is a big difference in percentage between $20K and $200K - and you tax liability will also depend on what state you live in. You are also going to need to pay self employment tax, which I believe is 15.3%. If you are talking about a large amount, you should really consult a CPA.

 

I didn't register my businesss, so I was assuming 35% on Federal (Max) and 7% on CA state tax max.. I don't know what else should I be counting on..

 

Self-employment tax and I think the maximum income tax for California is 9.3%

 

You would only pay a high tax of 42% if you made MASSIVE profit. Do none of you spend anything for the business you run.

New Laptop = write off and you pay no tax on the money you just used to buy it.

My accountant comes to me and says you need to spend this much on the business this month or you will have to pay taxes on it.

I have a reg full time job also so this isnt my main job even though I make 3 times as much online.

PGZ

 

I am in California and haven't registered business etc. Can I file taxes as individual (my regular work income + other online) without registering as company???

Thanks
dshah

 

I have the same question.. I only work online

 

Yeah, I'm saving money to pay the mafia(I mean the IRS). Taxes are such a joke. I'am going to reserve a portion of my income for it. Even though I haven't made much this year, I've saved much of it, and I plan to get a bunch of deductions for business expenses.

 

I don't think that's true the most federal can take is 35% no matter what you make and if you include everything I think the most my accountant said they can take is 47%. That doesn't matter if you make 500k a year of 50$ a year. I mean if you make less you will be in a lower bracket and prob only have to pay like 20% but 47 is the most. I'm not 100% sure on that but I think that's what it is.

 

Well, as I said, it depends on how much you are talking about and what state you live in, but you can certainly wind up paying more than 47% (it's about 45% just for Federal and State in California - not including Self-Employment tax (medicare). Of course it would be less if you lived in a state that doesn't have State income tax.

 

Yes this is no problem. You just have to file a schedule C.

The importatant thing to remember is to get you business deductions. You can deduct lots of things - Web hosting, domain names. What did you spend on advertising? Magazine subscriptions? Web site membership fees? Did you but ebooks? Paypal fees? Did you buy a computer for this business? What about a printer? Paper? Business cards?

 

Can I do deduction without registering for the business? if not

where can I register for business?

I know nothing about this kind of stuff..

 

You don't need to do any type of registering to take deductions. Actually I guess "expenses" would be a better word for it. The IRS Schedule C has a place for all this stuff. Again, I would see a tax professional if you are making any kind of money at all, it helps a lot.

Since there seems to be a lot of confusion, maybe I'll see if I can do a blog entry on business types. If I do, I'll point to it from this thread.

 

nice reminder..

 

You can register your business at your local county clerk's office. Phone book should have the address. Process is very easy. Once completed, next order of business is to open a business checking account at your preferred bank or credit union.

 

What's the difference between business checking account and personal checking account?

Am I allow to transfer between those?

I currently use personal checking account for DD from Yahoo.. Am I in deep trouble?

 

Trouble? No, not at all. But it's always good idea to separate business from personal finances, especially when it comes to matters of liability.

Accounting and record keeping can become a nightmare if you handle everything through a personal account.

So many reasons to keep things separate. If, for example, you write checks for business expenses, do you want your personal checking account number and home address floating around town for all to see?

As always, IMO.

 

Same damn thing.

 

This will only help you if your business is a separate legal entity (an LLC or corporation). If you are running a sole proprietorship, it doesn't really matter if you mix you business and personal finances, you are liable in any case. If you have an LLC or corp, then you want to make sure you keep your finances separate, otherwise you are "piercing the corporate veil" and you may be personally responsible for what your corporation does. Also the IRS may have a thing or two to say about it!

 

thank you guys.. now I get it.. I gotta contact CPA if I'm better off with corporation or sole proprietor