Self-Employed? Tax Time Is Coming

Filed in archive Bootstrapper Tips on January 21, 2010

© alancleaver_2000


It's almost that time of year. I never was a Beatles fan, but you've probably heard the lyrics...

Let me tell you how it will be;

There's one for you, nineteen for me.

Should five per cent appear too small,

Be thankful I don't take it all.

I have it by Stevie Ray Vaughn. And he makes it sound even more cynical and depressing.

Taxes don't have to be that bad. But if you've moved recently from a staff position to being self-employed, you need to change the way you think about your taxes.

If you become a contingent worker, you'll need to rethink your taxes. For someone used to being on staff, "It's a mindset shift," says Eddie Gershman, a partner in Deloitte Tax's private client group. The common perception is that you'll pay more tax if you work for yourself, since you'll cover the employer portion of Social Security and Medicare taxes. While you will be on the hook for that self-employment tax, the tax advantages to working for yourself can soften the blow.

BusinessWeek looked at the issue recently and has a couple of tips that can make April 15 a little less painful. You shoudl read it.