All self-employed, entrepreneurs, freelancers, independent contractors, etc.
Need to know how to file self employed taxes. It is your duty to do business in this country.
Whether your business is on the World Wide Web or not you are obligated to pay self-employment taxes.
There is nowhere on the internet to file self-employment taxes online for free. You can start online for free and pay later.
The Constitution gives Congress “the power to lay and collect taxes.”
When Tax Day comes along each April, many don’t know what to do about the income they’ve made for the year. And what is owed if anything is owed to the IRS.
We pay taxes because the federal, state, and municipal governments pass tax laws.
That tax revenue is supposed to pay for government services. The federal government collects about the same. As the state and local governments combined.
According to pewresearch.org. Individual income taxes are the federal government’s single main revenue source.
It’s helpful to take a closer look at how the tax system works in the context of its recent history.
The act of paying taxes can be shown all the way in history through the story of Moses.
Jesus even gave his thoughts on the act of paying taxes. You can read the passage here.
The bottom line is EVERYONE who receives income pays.
What Does the IRS Do If You Don’t Follow U.S. Tax Laws?
They encourage taxpayers to self-correct their returns and comply with their tax obligations.
They will apply both civil and criminal sanctions. Including prosecution and prison sentences. Against those who persist in violating the tax laws.
According to the IRS, taxes benefit everyone and you must do your share in this country.
If you aren’t complying, read this pdf from www.irs.gov about the consequences of non-compliance with the U.S. tax laws.
Do I have To Pay Taxes as A Self-Employed Person with an Online Business?
Yes! Paying federal and state income taxes is required for every business. Including those operated online.
But the payment of sales tax is a debated subject in some state legislatures.
Traditionally, all businesses are expected to pay retail sales taxes. Where applicable under state law.
Internet businesses have been exempted from this rule in many states. Unless they also operate in a physical “brick and mortar” location.
But some states have adopted sales tax rules that include Internet-only concerns.
The self-employed sector is growing. About 16 million workers in the U.S. are self-employed.
Americans are finding they love the control. Independence, and freedom from a routine that being self-employed gives them.
Self-employed customers work for themselves. They provide a service or a product to another individual or a business.
Most work part-time and full-time. Some also have W-2 employment.
The IRS requires us to file as self-employed or as a business because we have income. TurboTax will generate the correct forms for filing your business.
The self-employed are often paid with:
- 1099-NEC form (instead of a W-2).
- 1099-K form for Payment Card and Third-Party Network Transactions. Those who receive a Form 1099-K (Payment Card and Third-Party Network Transactions). Are sometimes confused about what this form is and if they need to enter it into TurboTax.
- Cash, often without any tax form received. They may keep their own records of their payments.
Many use QuickBooks products to track this information!
Examples of self-employment income include:
- On-Demand services like Uber, Lyft, Task, Rabbit, etc.
- Freelancers/consultants/independent contractors
Anyone with even a serious part-time e-commerce/online business. They’re running on the side. Is going to be getting 1099s every year about this time.
If you are self-employed and haven’t been paying income tax on this revenue. You need to learn about self-employment tax.
That’s the type of tax you’ll owe on your online income. Or any income you made while self-employed in any industry market.
Self-Employed vs. Employee
The major differences for self-employed filers are:
- No taxes are taken out at the time of payment because the filer is not employed by anyone. They are their own business. Thus, they are required to pay their own taxes.
- They pay an extra tax called a self-employment tax. Which will cover social security and Medicare tax.
For the self-employed customer base, about ¼ of them will owe taxes.
This will be calculated in TurboTax. It will affect the tax due/refund amount differently. Then a w-2 employee’s return.
When tax time rolls around. You can hear the collective cry out to all the self-employed businesspeople.
Whether online or offline who must start sorting their financial records. And finding out how much they’re going to have to pay the government this year.
Chances are that even though you operate an online business. You’re feeling the same way as the dreaded tax season approaches.
Yet, there are some facts about your taxes.
That might help simplify your distress. You can do it without having to hire someone else to handle your taxes for you. You can do it yourself!
How to File Your Taxes for Online Entrepreneurs
1. Get Organized
Knowing how to stay organized to file your taxes will save you plenty of headaches and the threat of an audit! Down the line.
As a newbie online entrepreneur, you can feel overwhelmed. By needing to go through the endless piles of paperwork.
Know you don’t have to go through this alone. There are plenty of tips, tools, and resources that can make the process a little more painless.
For example, Intuit is the parent company of QuickBooks and TurboTax. Has software for the self-employed. To assist in getting your bookkeeping up to date and getting your receipts in order.
If you haven’t done so already, it’s time to go paperless.
Storing your receipts online, tracking miles, income & expense. Invoice & payment, tax deductions, and tax checklists. Will save you from a mountain of paper to sort through come tax time.
The QuickBooks Self-Employed tool will help you organize your bookkeeping in a paperless way.
2. Decide If You Will DIY
Before you roll up your sleeves and go cross-eyed. Looking at a bunch of digits.
It’s smart to first decide what method you’ll use to tackle your taxes. Will you do it yourself, or will you recruit the help of an expert?
As I stated before, it’s possible to file your taxes on your own. If you’ve kept your records organized and are prepared to do the necessary, work.
TurboTax lets you speak with tax professionals. Such as CPAs, EAs, and tax attorneys for free by phone or live chat, in the event, you run into any questions.
If you decide that you will DIY you will need to find a reputable software company. To assist you with filing your taxes.
3. Choose the Best Product for Your Business needs
TurboTax Online Home & Business is now TurboTax Online Self Employed.
With the TurboTax Online Self-Employed product. You can start filing self-employment taxes for free.
But you will pay the price of the product on the payment page. You can only file free if you have a simple tax return.
These changes were made to make the filing process and running a business easier. For the self-employed filer.
As an Entrepreneur/Small Business owner. I use TurboTax Online Self Employed and I love it for its simplicity.
Read my Turbo Tax Online Self-Employed Review for all the benefits of this package.
Once you’ve chosen the best product for you. You can start online for free buy later or you can buy the desktop cd/download.
4. File for An Extension If You Need To.
Let’s face it—sometimes life happens. Despite your best intentions to stay ahead of the game. And get all your tax information submitted by the deadline.
You’ve realized there’s no way you’ll be able to make it happen. And failing to meet that end date can result in some pretty costly penalties.
The IRS is willing to cut you some slack every now and again. This means you can file for an extension to give yourself a little more time to look everything over.
TurboTax can help you with that too! Are you thinking about how to buy some time for your business? Here’s everything you need to know about how to file for a tax extension.
Tax time can be enough to beat fear in the hearts of online business owners.
Often at the beginning of many businesses. There is one person doing all the work to keep the overhead low.
The steps above will help you file self-employed taxes free to get started
Taxes might not be the stuff of our entrepreneurial dreams. But they need to be done—and they need to be done right.
Use this information to your advantage. You’re much more likely to tackle your first tax time as an online business owner.
With organization, strategy, and as little confusion as possible.
Read this article for more tips on filing income taxes online for the self-employed!
I hope this article inspires you to be more organized. Take your online and offline business more seriously. To maximize the benefits of being free one day.
If you would like to give your thoughts on self-employed taxes leave them in the comments section below.
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