Independent contractor photography co. personal and city/state tax question...?

J

Julie

New member
Where I live there is a 6% tax I add to my services. I also have been told to set aside 30% of what I make to keep to pay taxes during tax season. Say I charge $800 for a wedding. I add 6% for the city/state tax totaling $848. Should I set aside 30% of the $800 or 30% of the $848? I am trying to figure out my budget and am stuck.
 
I assume you have a state sales tax id and are remitting all of the sales tax you collect to your state on whatever schedule they set. If you don't have the tax id and/or aren't remitting the collected sales tax regularly, usually quarterly if not more often, you are already in trouble - get that straightened out IMMEDIATELY!! The sales tax you collect isn't just a bonus for you to keep - it isn't your money. It belongs to the state. And sales tax is a whole separate issue from income tax.

The income tax and self employment tax you pay is on the $800 minus any other allowable expenses. And yu don't just set it aside, you remit it quarterly to the IRS, and to your state and municipality if they have income taxes. If you don't make the quarterly payments, you can be subject to penalties when you file your annual return even if you pay everything then that you owe for the year.

If you have no idea what my answer means, see a CPA before you get in more trouble.
 
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