Self Employed Taxes and Tax Forms

      Its that time again. If you are self employed, the federal government requires you to submit your expected taxes for the prior year. The final tax payment for the year is due on Feb 16th. This should be the fourth of your 941 Self Employment taxes for the fiscal year 2011. You can estimate your taxes by basing it on your prior years taxes and adding 10%. To clarify, if you deposit 110% of your prior years taxes you will not be subject to penalties for underpayment of your taxes as long as the balance due is paid with your return on April 15th. Many of us have not finished totalling all the expenses and adjusting inventories for the year and the true bottom line may not yet be crystal clear.

     The IRS site is a wealth of information. Although it can be overwhelming, it is important to understand your responsibilities. This link at irs.gov provides all the forms and guides needed. The Schedule SE will help you to calculate your taxes. Getting disciplined to pay yourself and your taxes is a must in a successful business. Don't miss tax deadlines as the penalties and interest can compound and make matters worse.

     If you have employees, other taxes must be paid at the time of each payroll. Quarterly or annual reports are needed to both state and federal sources. We will save those for another day. For today, be sure to send the IRS your final payments to avoid penalties and interest to accrue on balances due.

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