Reducing Your Self Employment Tax

The Self Employment tax can take a good chunk of change out of your earnings, but luckily there are legal ways to reduce it for high income earners. If your business (your website, freelancing, etc) generates over $100,000 a year in profit, this article could save you thousands that you'd otherwise pay in self employment tax. Owners of Sole Proprietors, Partnerships, and LLCs are required to ...

Sole Proprietorship vs. LLC vs. S Corporation vs C Corporation

A Quick look at the differences between a Sole Proprietorship, Limited Liability Company, S-Corporation and a C-Corporation. Use table below should show the differences between these business types.

Schedule K-1

Schedule K-1 (Form 1065) is a form that partnerships and LLCs must complete and send to their partners / members. The purpose of the form is to clearly show each partner's share of profits / losses from the business as well as each owner's capital account balance. Completed schedule K-1s for each LLC member (in an LLC) or partner (in a partnership) must be included ...

Partnership

A partnership is an unincorporated business entity which has at least two partners (but can have more). Like a Sole Proprietorship a Partnership under the eyes of the law is not a separate legal entity from its owners, in that partners are financially and legally liable for business debts and lawsuits. It is worth mentioning that U.S. courts have recognized partnerships as separate business "entities" ...

Estimated Taxes

As a self employed webmaster or freelancer, you're required to make estimated income tax payments to the IRS. Most people who hold a job and receive a pay check don't have to worry about estimated taxes, as these estimated taxes are automatically taken out of their paycheck as "income tax withholding". Since no one is withholding your taxes to send to the IRS, you need ...

Limited Liability Company

A Limited Liability Company, also called an LLC for short, is a flexible type of business structure. Unlike a Sole Proprietorship or a Partnership, a Limited Liability Company in the eyes of the law is separate from its owners. It is its own entity. This separation allows the owners to "limit" their "liability" - as owners of a limited liability company are not liable for ...

Sole Proprietorship

A Sole proprietorship is a business entity that is owned and run by a single person, thus the name sole proprietorship. A sole proprietorship is not a separate legal entity and under the eyes of the law it does not make any distinction between the business itself and the owner. Since there is no legal distinction between the business and its owner, you don't need ...

Capital Gains Tax – Selling your Website

Selling your website or web business can bring in a lot of profit and with profit comes taxes. Unlike regular income though, the sale of a website can be classified as a capital gain, which means it's subject to capital gains tax instead of federal income tax - this means you ONLY pay the capitals gains tax. Note: If you are in the business of buying ...

State Income Tax

Webmasters must pay state income tax in the state that they reside. Not all states in the U.S. have an income tax, but most of them do. The state income tax is not the same as the federal income tax. Living in a state like Nevada, which has no state income tax, does not mean you don't have to file federal taxes. If you live ...

Federal Income Tax

As a webmaster who earns money online, the tax that's most likely to take the biggest chunk out of your earnings is the Federal Income Tax. All profits earned online whether it's through ads or services rendered, are subject to the federal income tax. 2011 Federal Income Tax Rates Tax Bracket Married Filing Jointly Single 10% Bracket $0 – $17,000 $0 – $8,500 15% Bracket $17,001 – $69,000 $8,501 – $34,500 25% Bracket $69,001 – $139,350 $34,501 – ...