It’s tax time! My “Ask An Accountant” series should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at firstname.lastname@example.org.
Is there a specific amount I should be saving for taxes at the end of the year?
Assuming you are set up as an LLC or sole proprietor, you should be setting aside approximately 15% of your net profits. This will at least cover the Self-Employment taxes on the profits. The amount of profit also needs to be added to your income, and income tax will need to be calculated on the additional amount based on your individual tax rates.
Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.
photo credit: austinpost.org
IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions