I started cleaning houses and plan to pay my own taxes at the end of year how much should I put aside?

Question

I have my clients pay me by check and I've been keeping any receipts for cleaning products, gas and my cell bills because I've been using that number on business cards. I was thinking maybe there would be a certain percentage to every $500 earned that should be put aside for the end of year. This is all new to me and I'd like to play it by the books, yeah! maybe that's what I need a book on some of this stuff.

Answer 1

It depends on where you live. In AZ we are required to put aside at least 20-30% in estimated taxes.

Answer 2

Spend a little money on an accountant and get professional answers.  You can also deduct the cost of the accountant.

Answer 3

You need to set aside about 35%.  15.4% is for self-employment tax - that is the employer's half and the employee's half for social security tax and medicare tax.  Then another 15% for income tax.  And another 5% or so for what state you are in.

And you need to pay these in quarterly.  Download Form 1040-ES from irs.gov .  That will give you the vouchers you send it once a quarter with your money, and a little instructions about the process.  Don't forget to do the same with your state.

Answer 4

If you're self employed you need to report and pay quarterly -- you can get penalized if you wait until the end of the year.  Estimate at least 10% ... maybe more ... for taxes.

Answer 5

In my state I would save 20% aprox, and it should be every 1/4 reported:)

Answer 6

It is self employed income.

Read more about self employed tax filing: http://taxipay.blogspot.com/2008/04/tax-...

Answer 7

I would need to know the annual net profit from your business to provide you with an answer.  A flat percentage is not going to fit all cases.

I would also need to know if you are single or married and if you have dependents.  I will assume you are single with no dependents.  

So, estimate your annual net profit.  You will pay about 15% of this amount in Social Security and Medicare taxes.  If you make over $9,000, take another 10% of the amount over $9,000.  That should cover most tax bills.  

If you have dependents or other income, go speak to a tax preparer to get a better estimate.

Answer 8

Get form 1040, schedule C and schedule SE and do a mock tax return.

Cleaning supplies are deductible.  Business cards are deductible.  Cell phone bills are not.  Gas may be if you have more than 1 client.

You will be taxed on your NET earnings.  roughly 15% of the net for SE tax and then you have regular income taxes to pay.  Many people put aside 25-30% to ensure they can pay the bill.