One of the difficulties that can arise as a freelance handyman is how to manage taxes. Understanding the tax law is obviously something that most people prefer not to address, due to the complexities of shearing the tax code. As a handyman working for yourself, you need to know some things about your tax situation, and if you have employees, there are several other things you may want to keep in mind.
First of all, if you are self-employed, no one else withholds tax from your wages every week. For this reason, the IRS requires that you do it yourself, in the form of "estimated taxes". Estimated taxes are generally paid on a quarterly basis, but on a somewhat odd schedule. Estimated taxes are paid using an IRS 1040-ES form, and these tax payments are due on April 15, July 15, September 15, and January 15. 39; following year. Failure to make these payments can result in severe penalties, which can exceed 45% of the tax amount, not to mention the interest charges that accrue daily.
The second thing that might concern you is payroll taxes. When you have employees, you should withhold income taxes from your employees' paychecks, as well as taxes on social security and health insurance. In addition to this, you need to match the employee's social security and health insurance deductions from your own pocket. These taxes are in addition to state source deductions, unemployment taxes and perhaps even local taxes depending on where you do business. The IRS requires that you file a quarterly tax return, Form 941, and that you file these taxes with the U.S. Treasury on a quarterly, monthly, or even weekly basis, depending on the amount of your payroll. Again, failure to pay these taxes at maturity or filing tax returns promptly at maturity can result in incredibly high penalties and interest costs, which can sometimes double. the amount you owe.
If you have problems with the IRS due to these types of tax problems and you are facing tax debts with increasing penalties and interest, there are actually things that can be done to protect your assets and your bank accounts against the IRS. , but you must be proactive in taking the necessary steps.
If you happen to fall behind on payroll taxes or self-employment taxes, it is important for you to understand that these types of taxes in particular represent the most important area of application for Whole IRS. These taxes are what the federal government relies on to fund daily operations throughout the year, so they take very seriously the pursuit of people who don't pay them.
However, having said that, keep in mind that the IRS is not completely bad, and they will work with you to catch up with you. But as I mentioned earlier, you have to be proactive about it.