Taxes for the Solopreneur
Don't forget about self-employment tax
When estimating how much to withdraw from your gross, don't just jump on Google and look up your tax bracket. For employees with a w-2, not only are they taxed in their bracket but they are also taxed on Medicare and Social Security.
Small business owners don't pay those taxes, but DO pay a self employment tax instead, to the tune of around 15%!
Consolidate banking accounts if you can
Even with an accountant to prepare my taxes when they are due, I still have to track all of my income and expenses (unless you want to pay a bookkeeper). Once you throw in business credit cards into the mix, it can be difficult to track deductible expenses each month as you have to switch between statements constantly. If you can, try and consolidate to just use one business credit card, or even just your debit card (so that all you have to do is look at your checking statement).
1099 forms and paying contractors
When you pay a contractor for more than $600 of work during the year, you have to present them with a 1099. Luckily, if you're paying with Paypal, Paypal will take care of it for you. This can be one less headache for a small business owner and is a pretty convenient and quick way to pay.
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The Sather Research eLetter