ShineTimeDetail
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- Sep 26, 2010
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I don't get why state tax is like 7% but business tax is more. How much money on say $1,000 should I put away for taxes?
I'm Confused with Taxes! How Much Should I Put Away?
- Thread starter ShineTimeDetail
- Start date
Barry Theal
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- Jul 17, 2010
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Real quick few words advice. Get an accountant!
Joe@Superior Shine
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- Jun 25, 2009
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C. Charles Hahn
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- Aug 27, 2007
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BINGO!
These are the kind of questions you ask a CPA, not people on a detailing forum.
ScubaCougr
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- Oct 19, 2010
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While you are looking for an accountant, check your state Department of Revenue (or whatever). Many will have handy little tax tables or other information on tax rates that you can use to guesstimate, or a whole section on 'Starting a business' that spells out all the different kinds of taxes.
Then you'll know how much you'll have left over to pay your new Accountant :dblthumb2:
Then you'll know how much you'll have left over to pay your new Accountant :dblthumb2:
Midnight1700
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- Aug 14, 2010
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Taking into consideration our current government, I'd say a good guess would be 100% plus another 20% just to be safe. But then again, the way they are going, it may not be....
oldmodman
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- Sep 25, 2007
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My advice is always worth what you have to pay for it.
And............
I've already told you more than I know.
SeaJay's
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- Aug 2, 2010
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This is amount that I stick aside from every detail.
Great advice. I have my CPA on speed dial for questions and stuff like this. When I asked how much to stick aside they told me that 20% should be more than enough. But to be safe I'm doing 30%. Never know now a days and I'd rather ensure I have the money at the end of the year than not.
Find a local CPA and have a sit down meeting with them. Most do free consultations and then charge by the hour after that. Mine charges $60 a hour, but I can call with questions and am not charged.
As the saying goes - it depends... Married or Single? Sole Proprietor or Corporation? 30% is a good staring point, but let's dig into the numbers (I'm and engineer with an MBA and do taxes on the side every year, so numbers are my thing).
Let's assume that you are a sole proprietor. Federal taxes on personal income is a sliding scale that increases as you earn more money, after deductions for personal exemptions and itemized personal deductions. You pay 10% on your first $8,375 ($16,750 if married), 15% on the amount between $8,375 and $34,000 (16,750 and 68,000 married), 25% between $34,000 and 82,400 (68,000 and $138,300 married), with additional brackets taxing you at 28%, 33%, and 35% as your income grows.
Good news is that you don't pay taxes on every penny that your client pays you, only the profit that you earn after expenses. Expenses would include supplies, advertising, equipment (lots of rules on depreciation), vehicle expense or mileage, etc.
Let's simplify. Assume that this is a second job, you are single and your first job pays $30,000. You earn $5,000 detailing and spend $1,000 on expenses related to detailing for a net profit of $4,000. Your gross income for the year would be $34,000. After subtracting $3,650 for personal deduction and aasuming you do not itemize, then you would subtract another $5,700 for a net federal taxable income of $24,650. This puts you in the middle of the 15% bracket ($8,375 to $34,000). You could earn another $10K and still be in the 15% bracket, so for starters, set aside 15%.
You also need to pay social security and medicare taxes (6% and 1.65% respectively, if you were someone's employee) - but since your are self employed the amounts double from 7.65% to 15.3%.
15+15=30%. If you end up in the 25% bracket (working spouse, higher paying first job) you might need to bump it up to 40%.
I live in Florida, but there are many states with State income tax and some cities have City income tax - way too muc h detail for my discussion here.
Taxes are not for the faint of heart; I would start with an accountant and ask for some assistance in what to do and not to do, record keeping, etc. I see a lot of people that mess up their personal taxes using Turbo Tax or some other software, so don't rely on technology. A novel approach might to barter detailing services with a small local accountant (they usually drive nice cars, right?).
Let's assume that you are a sole proprietor. Federal taxes on personal income is a sliding scale that increases as you earn more money, after deductions for personal exemptions and itemized personal deductions. You pay 10% on your first $8,375 ($16,750 if married), 15% on the amount between $8,375 and $34,000 (16,750 and 68,000 married), 25% between $34,000 and 82,400 (68,000 and $138,300 married), with additional brackets taxing you at 28%, 33%, and 35% as your income grows.
Good news is that you don't pay taxes on every penny that your client pays you, only the profit that you earn after expenses. Expenses would include supplies, advertising, equipment (lots of rules on depreciation), vehicle expense or mileage, etc.
Let's simplify. Assume that this is a second job, you are single and your first job pays $30,000. You earn $5,000 detailing and spend $1,000 on expenses related to detailing for a net profit of $4,000. Your gross income for the year would be $34,000. After subtracting $3,650 for personal deduction and aasuming you do not itemize, then you would subtract another $5,700 for a net federal taxable income of $24,650. This puts you in the middle of the 15% bracket ($8,375 to $34,000). You could earn another $10K and still be in the 15% bracket, so for starters, set aside 15%.
You also need to pay social security and medicare taxes (6% and 1.65% respectively, if you were someone's employee) - but since your are self employed the amounts double from 7.65% to 15.3%.
15+15=30%. If you end up in the 25% bracket (working spouse, higher paying first job) you might need to bump it up to 40%.
I live in Florida, but there are many states with State income tax and some cities have City income tax - way too muc h detail for my discussion here.
Taxes are not for the faint of heart; I would start with an accountant and ask for some assistance in what to do and not to do, record keeping, etc. I see a lot of people that mess up their personal taxes using Turbo Tax or some other software, so don't rely on technology. A novel approach might to barter detailing services with a small local accountant (they usually drive nice cars, right?).