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Stupid, Stupid question

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D

David Jonathan

Member
What is the name of your state? Minnesota

Okay, so I've started my own business (and it's taking off very well!) but I've got a stupid, stupid question.

Right now, between paying for liability insurance, and commercial auto insurance, etc. etc. I'm a little bit on the broke side, and no one has given me a straight-forward answer.

I'm obviously working for my self as a "contractor" with no corporation set up (yet) so I am curious about how much of my pay should I put off to the side for taxes?

I'm currently saving 35% of everything I bring in, under the assumption that it will go to taxes, I am curious if this seems like a reasonable amount, or if it's too much, or not enough. I will be paying a tax accountant at the end of the quarter (As I've heard contractors need to file taxes quarterly) but I haven't any "Extra" money to pay one right now for this simple answer.

(wow, what a long-winded easy question!)

Thanks in advance!
--Dave
 


S

Shay-Pari'e

Senior Member
David Jonathan said:
What is the name of your state? Minnesota

Okay, so I've started my own business (and it's taking off very well!) but I've got a stupid, stupid question.

Right now, between paying for liability insurance, and commercial auto insurance, etc. etc. I'm a little bit on the broke side, and no one has given me a straight-forward answer.

I'm obviously working for my self as a "contractor" with no corporation set up (yet) so I am curious about how much of my pay should I put off to the side for taxes?

I'm currently saving 35% of everything I bring in, under the assumption that it will go to taxes, I am curious if this seems like a reasonable amount, or if it's too much, or not enough. I will be paying a tax accountant at the end of the quarter (As I've heard contractors need to file taxes quarterly) but I haven't any "Extra" money to pay one right now for this simple answer.

(wow, what a long-winded easy question!)

Thanks in advance!
--Dave
Click to expand...
The IRS has a 800 line for these type of questions.
 
T

tranquility

Senior Member
It is impossible to tell without looking at your books. You will need to pay income tax on your *profit* and self-employment tax on that as well. 35% seems like a good starting point, but you just can't tell without looking at the books. Even to estimate your taxes requires this years books and last years results and the changes you think occurred from last year.

Bottom line, put in the 35% as an estimate before April 17. After a review of the first quarter by your accountant, you can raise or lower that amont for subsequent estimates.
 
LdiJ

LdiJ

Senior Member
I agree that 35% is a good starting point. Be sure to use some of it as an estimate on your state taxes. Maybe send 30% to the feds and 5% to your state (assuming that your state has income tax).
 
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