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Originally Posted by Sosa
I don't see how people making decent money in this biz still claim to be self employed and pay all that extra tax. Just incorporate, pay yourself a salary from the comany each month, and pay taxes every 3 months.
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It's not that simple though.
If you pay yourself a "salary" then you are required to pay withholding tax on that salary by the 15th of the following month.
Social Security and Medicare are "payroll" taxes so if you're collecting a salary then you have to pay those taxes every month. I pay mine at the bank on or before the 15th of every month.
Then the quarterly tax payments are for the estimated profit of my business (the money I made that wasn't "salary") That's a whole other ball of wax.
By incorporating or forming some other business entity, you can ease the pain of the "self employment tax" (paying both the employee and employer share of social security and medicare taxes) but you can't get out of paying those taxes altogether.