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Dealing with Explicit and Implicit Self Employment Taxes

By John V

Republish: EasyPublish™
Published: 29Feb2012
Word count: 410
Viewed: 73 time(s)

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There are a number of different explicit and implied self employment taxes. From the other half of social security taxes that employers cover for their employees, to the extra effort accounting takes for single-person business owners who have to figure everything out as they go before they can begin to struggle through small business tax preparation, there's no denying that the benefits of being self-employed certainly don't come without a cost. Fortunately, there are tools and strategies to help mitigate each of these costs, the existence of which is due in part to other small businesses' commitment to improving opportunities for their breed of entrepreneur.

The first time a person has to face paying a higher tax percentage as a freelancer, self-employed, or owner of a one-person business compared to what they would pay for the same income with an employer, it can be a shock: more expensive health care, no free coffee, and higher effective taxes? The short answer is yes, that's just how it is. But, any self-employed person also has a wider range of options for business-deductible expenses, so things like the printer and computer at home, gas and wear on an automobile, and even part of utilities if the home contains a home office that is relevant, can all be deducted as business expenses. Many of these are the kids of costs that a person incurs without thinking about the fact that they're directly related to the self-employed business, so getting to deduct them from that income is at least a small way to lessen the blow.

GThe cost of accounting, usually paid in the form of hours spent learning to do something new and complicated, is an example of the implicit self-employment taxes people face. The easy solution is to get an affordable and intuitive bookkeeping tool and then let that do most of the hardest work. The best modern accounting software packages targeted at the new crop of very small businesses made viable by online payment portals and marketplaces like Etsy are designed for the layperson to access and use easily and effectively. The easier learning curve, coupled with customizable automation to do things like filter portions of online transactions and create articulated profit and loss statements that even a person with no real accounting knowledge can understand and manipulate, turns this responsibility into an effective business tool instead of a painful black hole of time.

Self Employment Taxes Crop up in Many Ways. Having Effective Strategies to Address Them Is Crucial to Maintaining a Viable Small Business.

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