Being self-employed gives you a great degree of freedom and autonomy in terms of your work. However, it also means that you have unique tax responsibilities to consider. Don’t get caught off-guard—make sure you’re up-to-date on self-employment tax regulations from the start!
The Pay-As-You-Go Tax System
Everyone in America is on a pay-as-you-go tax system. Most of us just don’t have to deal with those regular payments.
If you’re a normal employee at a company, you likely receive a paycheck bi-weekly or monthly. Your employer withholds appropriate state and federal taxes each pay period and pays them to the government on your behalf.
If you’re self-employed, however, there’s no one automatically taking those taxes out of your paycheck. Nevertheless, you are still responsible for making regular payments. You aren’t allowed to wait until you file to settle up with the IRS.
Estimated Quarterly Payments
Self-employed individuals are obligated to make estimated quarterly tax payments to the government. If you are self-employed, this means that you need to keep track of your income each quarter and calculate the appropriate amount to pay. Failing to make regular payments may result in penalties and late fees when you file your taxes, and no one wants to deal with that!
In order to ensure that you are in compliance with all federal and state rules regarding self-employment taxes, it’s advisable to work with a tax professional. They can familiarize you with the tax implications of self-employment and help you keep track of your financial obligations to the IRS.
For assistance navigating self-employment tax regulations in Raleigh, contact the team at Taxation Solutions, Inc. We are here to help newly self-employed individuals and established professionals alike with all of their tax needs. Call our team today to find out how we can be of service!