Introduction
One of the things that you should know is that beginning a business is not an easy job. You also have to think about taxes and your other side of the worry will be, how much you should set aside for taxes. Another important thing, that you ought to know is that, income tax varies from state to state. Therefore, its best if you will look up for the rate of tax which is there in your state. Now, to come at the confusing point, let me tell you that the rate also changes depending upon income and few other factors. You can also check here for more details on, how much to save for taxes & broaden your horizons on the same.
Federal Tax Rates
From 10% to 37% is the federal tax rate & part of it depends on your income. The clients or the tax payers are usually advised to set aside 30% of their profit. And, one of the main reasons why this is suggested is because most of the clients make over $100,000. Also, you should note that, the tax is depended on your profit, so you can subtract all of your expenses for the product or services that you are offering before the tax is calculated. Besides all of that, subtractable income or expenses may include product itself, gas expenditure, rental office space, utilities, required subscriptions, etc.
Paying Business Taxes
If you were an employee, then you used to pay the taxes once in every year-end. But when you are having a business and are self-employed, then you are hoping that your payable tax will be over $1000 and the payments are due on every quarter instead. So, your payments for the 1st quarter will be due before 15th April, then second quarter before 15th June, 3rd quarter before 15th September, and the 4th quarter will be due before 15th January (i.e. next year). As long as you are sending your paid invoices and receipts to the bookkeeping, they will file these taxes automatically.
Taxes in Your Bank Account & Late Taxes
Firstly, there is nothing wrong if you save the money in your bank account I.e. the tax money. But set it aside for the taxes and keep a track of it. It is very easy to spend the money accidentally. That is why it is suggested to the tax payers to open up a business savings account. And, when the money is in a different account, like the business savings bank account, then the money is safe and you can pay your taxes in time. Moreover, when you have a business savings account, then the banks will ask you if you want certain percentage of your regular account to be transferred automatically.
