Question by yellowdj: How much does one pay in Small business tax?
How much tax does one pay for taxes if open a small business in handyman work? The State we live in is WA.
Best answer:
Answer by hrblockerrolquinn
Dear yellow: If you are thinking of just doing some part time work or even full time without incorporating, you will simply report your income on a personal return using Sch C. You will pay the normal tax rates all individuals pay. See IRS Pub 17 and the tax tables. (10% and up). You will have to pay SE tax (Soc Sec and Medicare) at the rate of 15.3%. If you feel you will owe taxes next year you should consider paying estimated taxes (1040ES) to avoid any penalties.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provide. Click on my profile to read more. Errol Quinn Enrolled Agent Master Tax Advisor
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Assuming you don’t incorporate, the net income just goes on your personal return, and income tax is what it would be if you made that same amount working for someone else. But instead of 7.65% withheld for social security and medicare, you’ll pay both the employee and the employer part – will net to around 14.1%.
If you incorporate, odds are you’ll pay more. If it’s an LLC you can treat it like a sole proprietorship and report on your personal return.