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How Much Tax?

Discussion in 'Business Operations' started by lafrance4078, Nov 18, 2004.

  1. lafrance4078

    lafrance4078 LawnSite Member
    Posts: 246

    Since I am new this year, I am just now writing my business plan, and figuring all of the other variables for next year. you know, my goals, my break even, advertising, employees. I was wondering how much, percentage wise, you guys pay each year. Example: If I make 60k this next year gross, will I pay Uncle Sam 26 percent of that? So I did a search and didn't find what I needed. Went to the SBA web site. Found out that I need to keep back 15.3% for my SE tax, and that I will need to do my 1040 plus a SE form. Any help would be appreciated.
  2. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,603

    As a sole proprietor, you will fill out schedule C as part of your tax return. Schedule C is basically an income statement showing your revenue, expenses, and net profit. The net profit from your business carries over to your 1040 form (line 12) and ultimately become part of your adjusted gross income. From adjusted gross income, you deduct personal exemptions and so called itemized deductions ( mortgage interest, certain taxes etc) to reach what is known as taxable income. Your income tax is computed on this number (taxable income). Additionally, self employment tax is added to regular income tax to derive your total tax you owe uncle sugar. This scenario is a very basic explanation. There are multiple factors that come into play. You will need to do a hell of a lot of studying or hire an tax professional. Best advise is to keep up with all your revenue, expenses, investments in equipment of any type and hire an accountant to compile the data.

    Fvstringpicker CPA, PE, PGBP (pretty good banjo picker)

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    For a good, cheap overview of taxes, go and buy a tax guide at the bookstore. I like Ernst & Young's version. You're right with the percentage (15.3), but that's off your NET, not gross. Also, you get to take half of that amount as a deduction on Form 1040.
  4. lafrance4078

    lafrance4078 LawnSite Member
    Posts: 246

    Thanks to both of you for your help. I am still looking for that estimated percentage though. I would like to us it to plan for next year. I will be getting a CPA soon though. Not right now. The wife and I just had a baby girl a month ago. She isn't working now so that RN pay is not coming in. I am an EMS supervisor here in Knoxville but it doesn't pay very well. We have savings to get us by pretty well but not enough for extra stuff like a CPA right now. Again thank you both. I have big plans for next year and your info will help me achieve my goals.

    HOOLIE LawnSite Gold Member
    Posts: 3,981


    A lot of small business owners I know feel safe by socking away 25% of gross. That's roughly what gets deducted off an average employees gross paycheck.

    You could do what I did, download some tax forms from the IRS site, and plug in the numbers based on what you project you will earn. That'll give you a good sense of what you'll owe.
  6. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Hi lafrance4078,

    Here is a post on LANDSCAPE BUSINESS PLANNING GUIDE. It has a link to a business plan that might be helpful.
  7. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    you are charged on the amount of net, for example this year I am going to be taxed approx 23% on my net. Last year I fell under a different category. I am going to have to pay in about $12,000 this year. Not looking forward to it.
  8. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,603

    Lafrance, Check you private messages

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