Subcontractor Taxes, Percentage Question

 
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Old 09-20-2008, 04:06 PM   #1
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Subcontractor Taxes, Percentage Question


I am newly set up as a subcontractor. since i need to pay taxes at the end of the year, what percentage should i put away from each paycheck?
i live in North Dakota. thanks.!!

someone told me to not worry about it until the end of the year, and just to spend my money, but that didn't sound like a good response. the person who told me is from hispanic dissent, from Mexico. i don't think hispanics in mexico pay taxes from what i gathered.

any responses appreciated
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Old 09-20-2008, 04:28 PM   #2
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Re: Subcontractor Taxes, Percentage Question


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Originally Posted by wensdy View Post
i am newly set up as a subcontractor. Since i need to pay taxes at the end of the year, what percentage should i put away from each paycheck?
I live in north dakota. Thanks.!!

Someone told me to not worry about it until the end of the year, and just to spend my money, but that didn't sound like a good response. The person who told me is from hispanic dissent, from mexico. I don't think hispanics in mexico pay taxes from what i gathered.

Any responses appreciated
10%

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Old 09-20-2008, 05:15 PM   #3
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Re: Subcontractor Taxes, Percentage Question


Yeah, I'd say 10% too. Make sure you pay quarterly to the IRS to avoid penalties.

http://www.irs.gov/pub/irs-pdf/f1040es.pdf
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Last edited by BKFranks; 09-20-2008 at 05:23 PM.
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Old 09-20-2008, 05:22 PM   #4
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Re: Subcontractor Taxes, Percentage Question


do you mean pay quarterly of the total income? example $8,000 would be paying $800 to the IRS? are there forms for paying quarterly?
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Old 09-20-2008, 06:04 PM   #5
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Re: Subcontractor Taxes, Percentage Question


10%, where is that number coming from? That will not even cover your double SS and Medicare. You better talk this over with an accountant if you do not know enough to figure this out for yourself. I would say around 30% of income will be paid.
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Old 09-20-2008, 06:10 PM   #6
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Re: Subcontractor Taxes, Percentage Question


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Originally Posted by Wensdy View Post
do you mean pay quarterly of the total income? example $8,000 would be paying $800 to the IRS? are there forms for paying quarterly?
One thing about the IRS they will never turn your money away. Yes you can pay quarterly, I have done it, during a couple of good years. I did not pay all of them but made a drastic impact on them. In 2006 my tax bill was rediculous, lickily I have a CPA who believes in TAX PLANNING and we paid as they year progressed to leave me with peace of mind on D Day.
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Old 09-20-2008, 06:29 PM   #7
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Re: Subcontractor Taxes, Percentage Question


35.8%....


12.4% soc. sec.
2.9% med.
13.5 % Fed.Tax
7.14% MQFE

$8,000 x 35.8% =2864.00 owed

Last edited by threaderman; 09-20-2008 at 06:32 PM.
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Old 09-20-2008, 06:49 PM   #8
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Re: Subcontractor Taxes, Percentage Question


The op said pay taxes at the end of the year. Not payroll, fica, suta, etc

Typical is 10% of gross sales are paid in taxes


500k gross 50k taxes worst case scenario. With a good accountant 0-5% is are better averages
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Old 09-20-2008, 08:08 PM   #9
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Re: Subcontractor Taxes, Percentage Question


I would certainly discuss this with your accountant or CPA. Your tax structure will depend on how your company is set up, Sole proprieter, LLC, S Corp, etc. Since you are in your first year you will most likely have accumulated start up costs that can offset some if not most of your profits for the first year. If you do not have an accountant or CPA FIND ONE NOW.
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Old 09-20-2008, 08:31 PM   #10
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Re: Subcontractor Taxes, Percentage Question


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Originally Posted by rbsremodeling View Post
The op said pay taxes at the end of the year. Not payroll, fica, suta, etc

Typical is 10% of gross sales are paid in taxes


500k gross 50k taxes worst case scenario. With a good accountant 0-5% is are better averages
My accountant tells me to put aside the 35.8,and I do.At tax time,I reap the rewards,because as you said it is no-where near the actual 35.8 for the total gross,but if and when a state or federal person wants to see my books,the money is there.
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Old 09-20-2008, 08:52 PM   #11
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Re: Subcontractor Taxes, Percentage Question


If you're getting a pay check you aren't a sub-contractor.

But... lets not even go there... that whole subject is getting so old.

If you're getting a "pay check" you better be setting aside at least 25% of it.

If you're actually getting paid from a invoice you are submitting that includes labor and materials for the job then you better get an accountant on it quickly.

If this is your first year you don't have to pay estimated quarterly payments this year, but you will be responsible for paying this sum next April if you show a profit.
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Old 09-20-2008, 09:01 PM   #12
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Re: Subcontractor Taxes, Percentage Question


I take away 30% off the gross. I usually get a good return at the end of the year after all the deductions are taken into account.
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Old 09-20-2008, 09:24 PM   #13
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Re: Subcontractor Taxes, Percentage Question


I am completely lost on this one. Why would I put away 35% of my gross for taxes


So if I am doing a 1 mill of business you guys are socking away 350K for taxes?


What are your accountants names and how can I take away their CPA license
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Old 09-20-2008, 09:33 PM   #14
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Re: Subcontractor Taxes, Percentage Question


I think most of us are referring to around 30% after materials, not on the gross. I have never looked at my tax burden as a percent of the gross sale. I look at tax burden based on what will be income.
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Old 09-20-2008, 09:45 PM   #15
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Re: Subcontractor Taxes, Percentage Question


It usually comes out to around 30% for me.
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Old 09-20-2008, 10:07 PM   #16
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Re: Subcontractor Taxes, Percentage Question


40%...................get creative
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Old 09-21-2008, 05:26 AM   #17
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Re: Subcontractor Taxes, Percentage Question


Quote:
Originally Posted by rbsremodeling View Post
The op said pay taxes at the end of the year. Not payroll, fica, suta, etc

Typical is 10% of gross sales are paid in taxes


500k gross 50k taxes worst case scenario. With a good accountant 0-5% is are better averages
Excuse my friend here but you can see where he is from.DC.

Just save 30% overall and you will be safe. And pay every Quarter. Oh and by the way save another $3,200.00 to help bail out your share of the housing crisis. Thanks!
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Old 09-21-2008, 07:20 AM   #18
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Re: Subcontractor Taxes, Percentage Question


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Excuse my friend here but you can see where he is from.DC.

Just save 30% overall and you will be safe. And pay every Quarter. Oh and by the way save another $3,200.00 to help bail out your share of the housing crisis. Thanks!

lol What you talking bout Willis???

Alright I give up 30% is the new 10% i guess. I can admit defeat. Maybe I should go in to the contractor tax shelter business

I will lobby for all you guys next year if you elect me your President.

Not taxes for Contractors in 2009!!!!
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Old 09-21-2008, 08:45 AM   #19
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Re: Subcontractor Taxes, Percentage Question


Talk to an accountant. A good accountant is the best investment you can make in your news business. There are way too many variables for anyone to tell you how much to withhold before a long discussion about your business.

Jim
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Old 09-21-2008, 09:03 AM   #20
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Re: Subcontractor Taxes, Percentage Question


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Originally Posted by rbsremodeling View Post
I am completely lost on this one. Why would I put away 35% of my gross for taxes


So if I am doing a 1 mill of business you guys are socking away 350K for taxes?


What are your accountants names and how can I take away their CPA license
NOBODY would know what percentage to recomend you should put away for your personal Fed and state income taxes if you are the owner of a company.

How could they?

Your company could be losing money and end up with a loss or you could be making a profit of any amount. Without a crystal ball to see what your profit and loss statement looks like who could know?

This guy says he is getting a pay check, as in 1099 illegal employee being classified as a sub contractor.

In that case you would assume he is getting a pay check as he said based on hourly wages. If that's the case it's pretty easy 25% minimum.

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