Tax Tips from Our Small Business Accountant
Starting your own business is such an exciting endeavor! It can also be quite a hectic time due to trying to get all your ducks in a row. With so much happening and so many different but important things to focus on, it should be no surprise that income taxes are one of the last things on your mind.
They cannot be ignored forever, however, because switching from filing as an employee to filing as self-employed requires a major change to the process. As an experienced small business accountant specializing in payroll tax services and more, Follin And Associates, PLLC has the advice, tips, and all-around guidance you need to navigate this new situation.
Quarterly Estimated Tax Payments
Without an employer to withhold taxes from your paychecks, you will have to take care of paying the government yourself. This means making quarterly estimated tax payments on four specific due dates throughout the year based on your anticipated net profit. Consider using a program like QuickBooks Self-Employed to help you make more accurate estimates, reduce errors, and enjoy the convenience of filing electronically.
As a self-employed business owner, you are now responsible for paying a separate and additional type of tax for Social Security and Medicare beyond your federal income tax. This amounts to 15.3% of your gross income, half of which would typically be matched and paid by your employer. You can lower the amount owed with tax-deductible business expenses.
Retirement & Health Insurance
If you want to defer some of your income to save for retirement, you will have to set up you own plan and manage whether you use pre- or after-tax funds. You have a few options when it comes to health insurance, but most likely you will purchase a plan through the Health Insurance Marketplace. Fortunately, as a self-employed individual, you can deduct the costs of your premiums without having to itemize or meet any thresholds.
Contact the team here at Follin And Associates, PLLC today to establish a small business accountant to assist with taxes for your new company in the Clemmons, Greensboro, High Point, Kernersville, and Winston-Salem, NC area!