[ale] [OT] sole proprietary taxes

[Transam]

On Tue, Apr 15, 2003 at 08:56:05AM -0400, James P. Kinney III wrote:
> On Tue, 2003-04-15 at 08:17, Jason Vinson wrote:
> > I have a question for the self-employed (contract work/sole proprietary) people out there.  I am trying to file my quarterly taxes and I have found the two forms I think I need to fill out, but I wanted to check with others who may be more experienced in this arena.  I have two questions:

> > 1.) Is it required to pay quarterly taxes when you are non-incorporated?

> It depends on the amount owed. If the tax owed exceeds a magic amount,
> you are required to fork it over. The idea is to "pay as you go" which
> allows cash flow for the govs. The real hassle begins if you have
> someone working for you. Then you have to pay in the taxes withheld on
> their check at whatever schedule is determined by the amount owed. Small
> shops (less than 10) can usually pay on a monthly basis. Some huge
> corporation have to cut a check every 2 days to account for the
> accumulated tax liability in a 48 hour period.

Basically, you must pay at least 90% of the taxes due on the amount
earned each quarter.  Whether or not you're incorporated and whether
you treat yourself as a subcontractor ("1099") or employee ("W2")
does not matter.

You are far better off paying an accountant to do this for you for the
first year than risking far higher IRS penalties and MAJOR**2 hassles
trying to get problems straightened out.  I can recommend my accountant.


> > and

> > 2.) Are the forms for Sole Proprietary taxes 500 ES (for state) and 1040 ES (for federal)?  And am I missing anything else?

You cannot learn this stuff over a few emails and the IRS web site
is worthless for this.

Bob Toxen
bob at verysecurelinux.com               [Please use for email to me]
http://www.verysecurelinux.com        [Network&Linux/Unix security consulting]
http://www.realworldlinuxsecurity.com [My book:"Real World Linux Security 2/e"]
Quality Linux & UNIX security and SysAdmin & software consulting since 1990.

"Microsoft: Unsafe at any clock speed!"
   -- Bob Toxen 10/03/2002

> I think the ES forms are for EStimated taxes. "That route leads to
> madness".  Sole-proprietorship taxes generally use schedules that are
> appended to the 1040 form. 

> A recommendation: Incorporate yourself as an LLC. It's easy, fast, cheap
> and protects you personally from the rare schmuck who wants to ruin
> small businesses and independents. As long as you only have yourself on
> payroll, the feds treat you as a sole-prop (no corporate tax
> paperwork!).


> > TIA,
> > Jason
> > _______________________________________________
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> > Ale at ale.org
> > http://www.ale.org/mailman/listinfo/ale
> -- 
> James P. Kinney III          \Changing the mobile computing world/
> CEO & Director of Engineering \          one Linux user         /
> Local Net Solutions,LLC        \           at a time.          /
> 770-493-8244                    \.___________________________./
> http://www.localnetsolutions.com

> GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics) <jkinney at localnetsolutions.com>
> Fingerprint = 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7 
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