self employment tax question

Discussion in 'Business Operations' started by kawakx125, Apr 23, 2012.

  1. kawakx125

    kawakx125 LawnSite Bronze Member
    Posts: 1,128

    I work a full time 40hr week job, and am starting a lawn care business on the side. Do i really need to pay quarterly estimated taxes for self employment? I honestly don't plan on making enough nor have any idea how much to estimate i would make to even make it worth doing that. I generally get pretty decent tax returns at the end of the year as it is, more than enough to cover any business operating taxes. I would only be operating in mowing season as well. seems like it'd just be much easier on me and more simple to hold out more from taxes every paycheck from regular job to ensure my expenses are covered throughout year. mainly just doing it for the write offs and make it legitimate so i can go after more customers. I only intend on it being a side business, but i think i'd have much better luck being legitimate. will the IRS allow me to pay at end of year, or just deduct amounts from my normal return? I would be doing sole proprietorship if that makes a difference
  2. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Posts: 2,132

    I'm an LLC (sole prop), I pay my federal at the end of the year. When you do your personal taxes there will be forms for the business in which you brake down your costs. What you profit or loose as a business will be combined with your other income and you will pay or be refunded accordingly. You do have the option of paying your estimated feds quarterly. Your state department of revenue may differ though. At the end every state is different, and I would always pay the money to confirm it with a local licensed CPA.
  3. kawakx125

    kawakx125 LawnSite Bronze Member
    Posts: 1,128

    I have a call into a CPA to see what the requirements for my state is. everything i've read online says pay quarterly for federal self employment tax which differs from income tax. it all seems to be based upon self employment being only income though. just seems a hassle to do it quarterly when its only going to be something to supplement my normal income and not a full time gig.
  4. fastlane

    fastlane LawnSite Senior Member
    Posts: 347

    My acct. does this for me. If I remember correctly self employment tax is social security tax. Your employer pays 7.5% and you pay 7.5%. If self employed you pay all 15% on profit. Your acct. can tell you if you need to withhold income tax..
  5. Roger

    Roger LawnSite Fanatic
    Posts: 5,923

    It is not an option, unless you have paid at least xx% of the previous year's obligation. I'm unsure about the xx, but it might be like 90.

    The obligations are due, regardless of how much work you do. Thinking it is not an obligation because "I don't do much" may be wrong. Again, whether or not estimated payments must be made will depend upon the uptick in income. If you have not kept pace with the quarterly payments, you will be due penalties and interest on what was not paid.

    I suggest you work with your tax preparer, and provide an estimate of your additional income. They will know quickly if enough is being withheld at your place of employment to cover the tax obligation.

    P.S. Kudos to you for thinking of this issue now and wanting to take the necessary steps. Good move!
  6. Snapper Jack

    Snapper Jack LawnSite Senior Member
    Posts: 525

    As some have indicated,some states are different and check with a CPA, having two jobs myself, I pay my LC taxes at the end of year
  7. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    They will likely let you slide. This only becomes and issue if you owe and owe big.

    You might want to depost 5% Quarterly.

    We do not know how much you make in your day job, if the side job will put you into another tax bracket or provide you with some good expenses. You do have some expenses that you would not have working 9 to 5.

    The first few years you can expect some start up cost / write offs. However, if you do not need the cash then 5% for SE more than safe if this is not your regular job.
  8. kawakx125

    kawakx125 LawnSite Bronze Member
    Posts: 1,128

    I don't expect it to be profitable at least this year, I should be able to show some losses the first couple years. I'm not planning on getting big at all, just a part time gig after work and weekends for a little extra cash to have fun with really. I enjoy mowing, and if i thought i could do it full time and make enough to cover my current income i would in a heartbeat. I make around 65k a year as it is and i can withhold as much or as little as i want from my checks. however i don't really see it being an issue as i'm positive i can show losses at least for awhile. If it gets to that point i'll make quarterly payments but i honestly don't see it getting that big
  9. Johnagain

    Johnagain LawnSite Senior Member
    Posts: 382

    I was doing lawn care part time a few years ago and working a full time job also. What the company accountant told me is just have an extra $25-50 taken out for withholding taxes on your W-2 and all you taxes should be covered. You do not need to pay extra social security taxes. I always got a refund after doing it this way. I always also filed a schedule C each year. Some years the sched C would have me owe money on my profits but the extra money that was taken out on the W-2 would cover any taxes on the profits I made. I didn't start making quarterly payments until I was laid off from my full time job. Check with your company's accountant just to make sure this would be OK.
  10. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    The IRS does not care how they get the money. They just want it in a timely fashion.

    Withholding on a day job is fine.

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