What percentage of my income do i take out for small business company?

Question

i just started out with a small business with a friend it is a partnership and we get paid just for labor . When i get my first check how much do i put away for taxes? what % is it of all profits ..? please help dont want to fall behind even before i get started

Answer 1

As a partner you are not subject to withholding and must pay estimated taxes.

Without getting too technical you should put away 15.3% for social security taxes.  You could then will out a W4 for your self and use the tables in pub 15 to figure the proper amount of tax to put back.  This method will work well if your self employment income is your only income.  If it isn't you should use the method in the 1040ES.

If at the end of the year you are subject to estimated taxes you must pay them at least quarterly, however you can pay more often such as monthly.