Re: Reducing the Self-employment tax
From the sound of it you'll be 1099-ed, so the commission thing is out the window.
Off topic, you should send *something* quarterly... anything -- else the IRS will assume you were ditching them. No idea what kind of money you're talking about, but you may be looking at a bit of a penalty this year. Regardless, it's an audit flag to not send them anything. If it's your first year, and if you did not 'owe' money on 15 APR last year, then you'll most likely avoid the penalty.
If you're doing the same thing for 2006, they will expect you to pay quarterlies based on what you earned that quarter. Expect means they'll bang you with penalty if you do not. And I would strongly recommend you put your withholdings back to normal on your W2 position. This way you pay as you earn with your side business, and you're not giving the gov't a free loan if things go slow.
Anyway -- I know the SE tax is tough to swallow... One thing you may consider next year is including the 14% into your base hourly rate. That way you don't have to have a ton of concern over it, since it's basically built into your income.
You may want to search around for the deduction piece as well.... have your clients ever contacted you on your cell phone? ding. New computer? ding. Upgrades? ding. Take them out to dinner? ding. internet connection? ding, % of your home used exclusively for your business activites? ding ding.
Anyway, it's all doable solo. g/l
|