How To Handle Your Tax Withholding As A Self Employed Person When Setting Up A Small Business For Tax Season

As a self-employed person, how do I handle my tax withholding?

If you have your own business, it's very important to pay in taxes timely and pay in the right amount. If you have an incorporated business, you may actually be able to be an employee of your corporation. And you would withhold taxes from your salary much like you would do for people who work for you. If you are not incorporated or you do not take a salary from your incorporated business, you generally pay in quarterly. We advise people to actually prepare a tax projection on a quarterly basis, and that means laying out their business income along with their personal deductions to determine what exactly they owe at that point in time. The regulations require that you, for lack of a better term, “square up” every quarter and pay tax on the income, net taxable income, that relates to that quarter.