Full Video Transcript
Many business owners and freelance workers are subject to self-employment taxes. The self-employment tax is a Social Security and Medicare tax, similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. Self-employed individuals are responsible for calculating and paying this tax owed, since there is no employer to do it for you. Generally, the IRS considers you to be self-employed and subject to the self-employment tax if you carry on a trade or business as a sole proprietor, independent contractor, or with a partner. It doesn't matter if you work full time, part time, or on even if you carry on a little business on the side. Basically, if you're in any kind of business for yourself, you need to evaluate your liability for self-employment taxes. Failure to pay this tax can result in serious penalties.
For more information about self-employment taxes and aspects of being in business for yourself, contact an attorney in your area today.