Friday, July 12, 2013

Self Employed Individuals & Independent Contractors

Self-Employed Individuals

As an individual conducting your own business, you may want some guidance along the way. For example, what taxes do you need to pay? To make sure you have the basics covered, here's a list of helpful resources.

Starting a Business

Follow these Steps to Starting a Business

Financing a Business

Federal and state government agencies do not provide grants to self-employed individuals for starting a business. However, there are a number of low-interest loan programs that help individuals obtain startup financing. Visit the this Loans and Grants Search Tool to get a full list of grant, loan and venture capital programs for which you might qualify.

Tax Information for the Self-Employed

Employer Identification Number

  • Understand the Employer Identification Number (EIN), also known as a federal tax identification number, that is used to identify a business entity.

Small Business and Self-Employed One-Stop Resource

  • Get a broad range of state and local tax information, including resources for specific industries, professions, self-employed entrepreneurs, employers and small businesses.

Online Classroom

  • Participate in a series of self-directed workshops on a variety of topics for small business owners, hosted by the Small Business/Self-Employed online classroom.

Self-Employment Tax

  • View information on the Self-Employment Tax, a Social Security and Medicare tax for individuals who work for themselves.

Sole Proprietorships

  • Obtain a listing of tax forms that a sole proprietor needs to file, along with additional resources.

Visit this State and Local Tax page to learn more about your state’s taxes required for self-employed individuals.

Social Security


Social Security Information for the Self-Employed

  • Learn how to report your earnings.
Work Activity Report - Form SSA-820-F4

  • Access the Social Security benefit claim form for self-employed individuals.

How to Become an Independent Contractor

Commonly known as consultants, freelancers and self-employed, independent contractors are individuals who are hired to do a particular job, receiving payment only for the work being done. Independent contractors are business owners, and are not their clients' employees. They do not receive employee benefits or the same legal protections as employees, and are often responsible for their own expenses. If you think you want to be an independent contractor, explore the resources below.

Start Your Business

Like all other small business owners, you will need to follow some essential steps to starting your business. This includes getting the proper tax registrations, business and occupational licenses and permits from federal, state and local governments in order to operate legally.

As an independent contractor, you will also want to create a standard agreement for your services. You can find a number of other sample agreements on the Internet, but it is best to consult an attorney to draft one specifically for your business, since your agreement will be a legal document between you and your client.

Find Business Opportunities

Large and small businesses, organizations and government agencies hire independent contractors for a wide variety of jobs, from professionals such as medical billing specialists accountants and engineers to trades like construction and trucking.

Operate Your Business

As an independent contractor you are responsible for paying your own taxes, Social Security, unemployment taxes, workers' compensation, health insurance, and other benefits. In addition, you and your client should understand the differences between an independent contractor and an employee, as well as your legal rights and responsibilities.

Pay Your Taxes

Independent contractors must pay federal taxes on income and FICA; however, your client will not withhold taxes for you. As a business owner you will need to pay estimated taxes throughout the year instead of once a year on April 15.

The following IRS resources will help you understand how to pay federal taxes as an independent contractor:

Self-Employed Individual Tax Center

Get all the information you need on federal tax at this one-stop resource for independent contractors.

Federal Tax Forms for Sole Proprietors

Obtain a list of IRS forms frequently used by independent contractors.
Depending on the location of your business, you may be required to file state and local income and business taxes. Visit this State and Local Tax page for more information.

This article courtesy of: U.S. Small Business Administration
http://www.sba.gov/content/self-employed-independent-contractors

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