How Much Tax Will the Taxman Take?
Q: What resources can you suggest to help me learn about tax laws that apply to me as an independent Web designer?
Laura Pelton Sweet
A: You're smart to learn about taxes from the outset, as you have a variety of tax obligations. You have to estimate your federal taxes (and pay them quarterly) as well as a Self-Employment Tax to cover Social Security, Medicare, and additional state and local taxes.
The IRS itself provides a great deal of information. One pertinent publication is Starting a Business and Keeping Records (#583)-call (800) TAX-FORM for a print version or download it at www.irs.gov. The IRS also has a new Small Business and Self Employed Community section on the site. You can also call your nearest IRS office for class and workshop subjects, dates and locations.
There are many books on small-business taxes, including J.K. Lasser's Taxes Made Easy for Your Home-Based Business (John Wiley & Sons) by Gary Carter and Small Time Operator (Bell Springs Publishing Co.) by Bernard B. Kamoroff.
States differ on whether the product of a Web designer is subject to sales tax. In Oregon, you don't have to pay a sales tax on your work, but in, say, California, the work of commercial artists and designers is taxable if the client gets title to, or permanent possession of, hard-copy or electronic media.
Self-employment experts Paul and Sarah Edwards are the authors of 14 books. Send them your start-up business questions at www.workingfromhome.com or through us at Entrepreneur.