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How Do I Budget A Small Business? Plus Self Employed Taxes 101

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"If you're self-employed, you pay the combined employee and employer amount, which is a 12.4 percent Social Security tax on up to $127,200 of your net earnings and a 2.9 percent Medicare tax on your entire net earnings." -SSA.Gov https://www.ssa.gov/pubs/EN-05-10022.pdf Quarterly Business Tax Payments "The rule is that you must pay your taxes as you go. If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment." - TurboTax https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Estimated-Taxes--How-to-Determine-What-to-Pay-and-When/INF12007.html Tools: Budgeting, Debt Snowball, Investing, Creditors http://gatewaypeople.com/ministries/stewardship/resources Website - http://gatewaypeople.com/ministries/stewardship Facebook - https://www.facebook.com/gatewaystewardship/ Instagram - https://www.instagram.com/gatewaystewardship/ Twitter - https://twitter.com/gwstewardship
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Text Comments (21)
GiftysBeauti (11 months ago)
This was a very helpful and informative video!
AVoicefor Hope (5 months ago)
No Because Self Emp is NOT FEDERAL therefore you Do NOT have to Pay Income tax. Getting to know a bit abt tax law hepls.
Traci S Campbell (3 months ago)
Wish I saw this kind of info when I first started my entrepreneurship journey
Matthew Cherry (3 months ago)
I'm sorry am I missing something? You invested $500.00 so your total return was $1000.00, your profit would equal $1000.00 minus (materials purchased+$500)=Profit. You need to subtract the money you initially invested in the business. You wouldn't pay taxes on the $500. you loaned the business from your personal funds.
Gateway Stewardship (3 months ago)
Matthew Cherry that’s a great observation! You would subtract your initial investment. I was leaving the initial investment separate in the example to be taken out at a future time. But it’s certainly not explained in the video. Good catch.
A. Beatty (3 months ago)
thanx, so informative. look forward to other videos.
野村ERIK (4 months ago)
Not Christian at all, but thanks for the video. Very informative content.
Wandering Wade (4 months ago)
This is just what I was looking for. My only question is about starting a VERY small side business where I don't know what to estimate for the quarterly tax. I might not make any money in 2 quarters and finally make some money in the 3rd. Is it about sending the IRS any kind of check in the quarters even if very little? Sometimes a new business shows no profit for a few years. How do you handle the quarterly tax payments for that?
Araya Hope (5 months ago)
I loved this video I also subbed!!!
NELOPES7 (5 months ago)
What about a s-corp ? Paying into a retirement Tax free
Gateway Stewardship (5 months ago)
Going into Sole Proprietorships, Partnerships, LLCs, S-Corps, and C-Corps will have to be for another video, I love the direction you're going though!
Breiana France (6 months ago)
Thank you this was very helpful! Just asking for some advice, how much from our business income should we use for personal use? How do you budget the two?
Gateway Stewardship (6 months ago)
Breiana France Great question! Here is a link to the budgeting tools for personal finances: http://gatewaypeople.com/ministries/stewardship/resources/2014/08/28/how-to-create-and-use-a-budget-in-3-easy-steps 1) track everything you spend for a month in your personal finances. 2) create a budget based on what you actually spend. 3) live on the budget and continue tracking expenses to make updates as you go. Hope this helps! -David
Mike S (6 months ago)
Good video. I've seen other videos say that the initial $500 should be a loan to the business. When the business pays the loan back to you, there are no personal income taxes on it.
Gateway Stewardship (6 months ago)
Mike S good insight!
4x4 & Ponds UK (7 months ago)
It's also only 45% tax rate when we have an income over £150,000 per year. You need 3 bank accounts. Your personal account and a business account with a business savings account. This business savings account is for paying your tax from. You should never mix personal accounts with your business, it's bad practice.
Gateway Stewardship (7 months ago)
Good comment! Yes, it's best to have at least three accounts. Personal. Business Checkin. Business Savings. I appreciate the UK context as well!
4x4 & Ponds UK (7 months ago)
In the UK we don't pay taxes by estimate but by past revenue for the year or quarterly based on which group we're in. We also have a £10000 personal allowance which means we only pay taxes on income over 10000 then we take off Capex, Opex and what's left is profit. We only pay tax on profit. A good system I think but difficult to learn.
BRIAN MATTHEWS (8 months ago)
VERY HELPFUL
Niko Paul (9 months ago)
Thankful for your clarity!!
Danie Lavios (9 months ago)
Super helpful! One question, where did you find the information about the percent of Social Security Tax a self-employed individual is needing to pay? I have search extensively and this is the only place I have found a specific number thus far. Thanks!
Gateway Stewardship (9 months ago)
Danie Lavios https://www.ssa.gov/pubs/EN-05-10022.pdf Third paragraph 😃

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