Tax Me

Discussion in 'Business Operations' started by Newbie, Feb 27, 2002.

  1. Newbie

    Newbie LawnSite Member
    Messages: 12

    Quick ? needing a ever-how long you need to take answer....

    How can I estimate taxes on a sole-p company? Should I estimate 15% 25% of gross? what?
    Thank's ahead of time
  2. Lanelle

    Lanelle LawnSite Bronze Member
    Messages: 1,361

    I can't emphasize strongly enough how important a good answer to this question will be to you. You will have to pay your total FICA plus income tax as well as whatever your state wants. Please ask a professional and be prepared to give realistic answers about your finances so that the 'whole picture' can be understood. IF you fail to take care of this, the IRS will become an unpleasant presence in your life.
  3. bruces

    bruces LawnSite Senior Member
    Messages: 648

    Gross has absolutely no bearing on your taxes. Net is the only thing that matters.

    You have to know your net income (before your compensation) to determine what you will pay tax on. Your tax will probably be at least 30% plus whatever your state tax rate is. In Missouri the top state rate is 6%, so that would be a total of 36%. If you are doing well or have other income or a spouse with income, you could be looking at closer to 50% total tax (28% income tax, 15.3% self employment tax, 6% state tax).

    So, knowing your net is important. If you can't figure it out, get a good tax advisor. You don't want to find out how much tax you owe on April 15 and not have the money to pay it. I have seen many self employed people get behind on taxes and they can never seem to catch up.
  4. Newbie

    Newbie LawnSite Member
    Messages: 12

    A big thanks!
  5. If you are doing your own taxes now you should be able to do this yourself. Order Publication 505 from the IRS. It has a work sheet that you use to figure your quarterly payments. It takes into account all business income & expenses + if you/spouse are earning wages at a job this is caculated also. You will have a very accurate picture of your tax liability. This takes about 1-2 hours per quarter if you keep good records.
    Your state should be able to provide you with something similar.
    This is all pretty simple for a sole prop.
    I'd say if you were preparing your own taxes before you should be able to do this, if you didn't, absolutely go with the pro.

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