BUSINESS OWNERS ASK - HOW MUCH TAX WILL I OWE FOR 2022?

 


As we approach year end, everyone begins to wonder, "HOW MUCH MONEY WILL I OWE FOR TAXES for 2022?"

As a business owner, it is extremely important to have a PROFIT/LOSS statement that either you prepare for yourself or hire a bookkeeper to prepare for you. Here is how you can figure out the taxes that you may owe by using your last Profit/Loss statement for yourself.

As a business owner, nobody except YOU is required to automatically withhold taxes from your pay. And unless you withhold and pay your own taxes, YOU CAN EXPECT TO OWE TAXES ON THE PROFIT THAT YOU MADE. The only way that you will NOT OWE MONEY, is if you did NOT MAKE ANY PROFIT or YOU OVERPAID YOUR TAXES with having children or with estimated tax payments.

If you don't generate a profit for any 3 of the last 5 years, the IRS will not let you claim to be a business owner any longer and take a deduction for those expenses. This is VERY DIFFERENT for first time business owners to understand. So, PLEASE READ CAREFULLLY.


The Profit/Loss statement is divided into 2 main parts:

Part 1 contains the TOTAL EARNINGS (inflows) which appears at the top.

Part 2 contains the TOTAL EXPENSES (outflows) which appears grouped together underneath the earnings. The TOTAL EXPENSES comes from the receipts that have been added together after you spent money on fuel, insurance, lease equipment (truck, trailer, other), repairs, supplies, etc.

At the very bottom of the PROFIT/LOSS statement, you will find the NET RESULT or aka PROFIT. The PROFIT is the difference between the TOTAL EARNINGS minus the TOTAL EXPENSES and is the most IMPORTANT information on the page.


It is important because the PROFIT is what is used to calculate THE AMOUNT OF TAXES THAT YOU OWE.

CALCULATION

By taking the PROFIT and multiplying it by .153 (15.3%), you will calculate the SELF EMPLOYMENT tax. This is a standard rate that all sole proprietors/single member LLCs will have to pay. It is the social security and medicare tax PLUS the match that everyone who works in America is required to pay.

The FEDERAL AND STATE taxes are based on rates that change as your income changes. You can look up the tables with a search on the internet for your state and the federal tax rates to use based on your marital status.

Most profitable truckers and business owners that I work with will owe between 11% and 25% for total taxes depending on the profit and whether or not they live in a state that charges income tax.

It is important to review your PROFIT/LOSS throughout the year to make sure that you are saving and paying your estimated taxes to the IRS to avoid penalties when you don't do this.

If you would like any assistance with taxes, tax preparation, tax filing, bookkeeping, or business set-up and consultation, contact me. I love this stuff and am happy to assist!


Thanks for reading and stay safe!
Bonnie
www.Dorseytaxplace.com
972-672-8850
#taxpreparation #business #bookkeeping

Location: Keller, TX, USA

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