Sunday, January 24, 2010

Home Based Businesses and Income Taxes

Don't forget to take care of your federal and state income tax obligations. A good rule of thumb is to set aside at least 35% of the gross earnings, let's say from Clickbank. The entrepreneur should make estimated tax payments on April 15, June 15, and September 15 of the current tax year. The current tax year would be 2011. One more thing: make your final payment on January 15 of the following year. The 30% would satisfy the federal tax component, and the Medicare. If you have state income taxes to pay, factor in at least 5%.

Please be sure to discuss your tax paying strategies with a qualified tax preparer.

So keep this in mind: for every $100 in gross commissions, $35 is sent to the government, Fed and State. Be disciplined.