Tax implications of having some self-employment income?
"You would put your earnings (and expenses, don't forget) on Schedule C, and then do a Schedule SE for self-employment tax. http://www.irs.gov/businesses/small/article/0,,id=98846,00.html 1040ES isn't used to compute taxes, it's used to pay taxes. Generally you are supposed to pay taxes as you go, rather than when you file. There are exceptions where you won't be penalized for paying when you file, ""most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller"" from http://www.irs.gov/taxtopics/tc306.html  i.e. there's a safe harbor as long as you pay as much as you owed the year before. If you owe a lot at the end of the year a second time in a row, then you get penalized." Havoc P's answer is good (+1). Also don't forget the other aspects of business income: state filing fees, county/city filing fees, business licenses, etc.  Are there any taxes you have to collect from your customers? If you expect to make more this year, then you should make estimated quarterly tax payments.  The first one for 2011 is due around the same time as your federal income tax filing.
"Be careful of the other answers here. Many are wrong or partially wrong. The question implies that you knew this, but for everyone else's benefit, you can keep you LLC organization and still elect to be treated as a S-Corp by the IRS just for tax purposes.  You do this by filing Form 2553 with the IRS. (You can also, by the way, elect to be taxed as a ""regular"" C-Corp if you want, although that's probably not advantageous.  See Form 8832.) The advantage of electing to be treated as an S-Corp is that income beyond what constitutes a ""reasonable salary"" are not subject to social security and medicare taxes as they would when paid was wages or counted as self-employment income on Schedule C.  Depending on what you need to pay yourself to meet the ""reasonable salary"" test, your overall income, and other factors about your business, this could result in tax savings. Contrary to other answers here, making this election will not force you to create a board of directors.  You are still an LLC for all purposes except taxes, so whatever requirements you had in organization and governance at the state level will not change.  You will have to file a ""corporate"" tax return on Form 1120S (and likely some corresponding state tax form), so that is additional paperwork, but this ""corporate"" return does not mean the S-Corp pays taxes itself. With a couple of exceptions, the S-Corp pays no taxes directly (and therefore does not pay at the corporate tax rate). Instead the S-Corp apportions its income, expenses, and deductions to the owner(s) on Schedule K.  The owners get their portion reported from the S-Corp on Schedule K1 and then include that on their personal Form 1040 to pay tax at their personal rate. In addition to filing Form 1120S, you will have to handle payroll taxes, which will create some additional administrative work and/or cost. Using a payroll service for this will likely be your best option and not terribly expensive. You've also got the issue of determining your reasonable salary within the rules, which is the subject of other questions on this site and other IRS guidance." Can I transfer these money to India in my saving account? What will be tax implication to me? Yes you can. Whether you transfer to India or not does not change your tax obligation. If I understand correctly you are being paid an allowance in UK to cover your expense. If you are saving; then the saving portion is treated as income and you have to self declare this and pay tax according to you tax bracket. Can I transfer these money to my wife's account as a gift? What will be tax implication to me and my wife? There is no tax obligation to your wife. The tax obligation remain same to you as in first point. What if i transfer these money as loan refund to my friend? What will be tax implication for these to me and my friend? If there is proper paper trial to show your friend loaned you a sum at zero percentage and you have paid back; amounts are not to large; then there is no tax obligation to your friend. The tax obligation remains same to you as in point 1. This is wrong.  It should be  or  Now, to get back to self-employment tax.  Self-employment tax is weird.  It's a business tax.  From the IRS perspective, any self-employed person is a business.  So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare).  This gives your personal income.  Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax).   So new calculation  or they actually let you do  which is better for you (smaller).   And your other calculations change apace.   And like I said, you can simplify Q1se to  and your payment would be  Now, to get to the second quarter.  Like I said, I'd calculate the income through the second quarter.  So recalculate A based on your new numbers and use that to calculate Q2i.   or  Note that this includes income from both the first and second quarters.  We'll reduce to just the second quarter later.  This also has you paying for all of June even though you may not have been paid when you make the withholding payment.  That's what they want you to do.   But we aren't done yet.  Your actual payment should be  or  Because Q2ft and Q2se are what you owe for the year so far.  Q1ft + Q1se is what you've already paid.  So you subtract those from what you need to pay in the second quarter.  In future quarters, this would be  All that said, don't stress about it.  As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care.  So just make sure that your total payments match by the payment you make January 15th.   I'm not going to try to calculate for the state.  For one thing, I don't know if your state uses Q1i or Q1pi as its base.  Different states may have different rules on that.  If you can't figure it out, just use Q1i, as that's the bigger one.  Fix it when you file your annual return.  The difference in withholding is going to be relatively small anyway, less than 1% of your income. Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld.  At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A).  In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable.  That profit goes into a line in the 1040.   You need to file schedule SE.  This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect.  Self employment tax is SS/Medicare.  There's a line for this on the 1040 as well.  You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES.  That avoids a penalty (which usually isn't that large) for not withholding enough.  As an alternative, you can have your regular W2 job withhold extra.  As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple.  Sorry.  You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well.  You can start a solo 401(k) or SEP IRA, for example.  Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited. As a new (very!) small business, the IRS has lots of advice and information for you. Start at https://www.irs.gov/businesses/small-businesses-self-employed and be sure you have several pots of coffee or other appropriate aid against somnolence.  By default a single-member LLC is 'disregarded' for tax purposes (at least for Federal, and generally states follow Federal although I don't know Mass. specifically), although it does have other effects. If you go this route you simply include the business income and expenses on Schedule C as part of your individual return on 1040, and the net SE income is included along with your other income (if any) in computing your tax. TurboTax or similar software should handle this for you, although you may need a premium version that costs a little more.  You can 'elect' to have the LLC taxed as a corporation by filing form 8832, see https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc . In principle you are supposed to do this when the entity is 'formed', but in practice AIUI if you do it by the end of the year they won't care at all, and if you do it after the end of the year but before or with your first affected return you qualify for automatic 'relief'. However, deciding how to divide the business income/profits into 'reasonable pay' to yourself versus 'dividends' is more complicated, and filling out corporation tax returns in addition to your individual return (which is still required) is more work, in addition to the work and cost of filing and reporting the LLC itself to your state of choice. Unless/until you make something like $50k-100k a year this probably isn't worth it. 1099 Reporting. Stripe qualifies as a 'payment network' and under a recent law payment networks must annually report to IRS (and copy to you) on form 1099-K if your account exceeds certain thresholds; see https://support.stripe.com/questions/will-i-receive-a-1099-k-and-what-do-i-do-with-it  . Note you are still legally required to report and pay tax on your SE income even if you aren't covered by 1099-K (or other) reporting. Self-employment tax. As a self-employed person (if the LLC is disregarded) you have to pay 'SE' tax that is effectively equivalent to the 'FICA' taxes that would be paid by your employer and you as an employee combined. This is 12.4% for Social Security unless/until your total earned income exceeds a cap (for 2017 $127,200, adjusted yearly for inflation), and 2.9% for Medicare with no limit (plus 'Additional Medicare' tax if you exceed a higher threshold and it isn't 'repealed and replaced'). If the LLC elects corporation status it has to pay you reasonable wages for your services, and withhold+pay FICA on those wages like any other employer. Estimated payments. You are required to pay most of your individual income tax, and SE tax if applicable, during the year (generally 90% of your tax or your tax minus $1,000 whichever is less). Most wage-earners don't notice this because it happens automatically through payroll withholding, but as self-employed you are responsible for making sufficient and timely estimated payments, and will owe a penalty if you don't. However, since this is your first year you may have a 'safe harbor'; if you also have income from an employer (reported on W-2, with withholding) and that withholding is sufficent to pay last year's tax, then you are exempt from the 'underpayment' penalty for this year.  If you elect corporation status then the corporation (which is really just you) must always make timely payments of withheld amounts, according to one of several different schedules that may apply depending on the amounts; I believe it also must make estimated payments for its own liability, if any, but I'm not familiar with that part. Do you have any insight on average *effective* rates paid by SE owners?  As a counterpoint to your (very valid) links, filing as S-corp allows for taxes on distributions to be exempt from payroll tax and taxed at much lower rates. Also, being SE allows for various deductions not possible for wage earners. There's probably other examples not immediately coming to mind.  Also, SE taxes equal taxes otherwise paid by employer + employee. It's just that those employer taxes don't appear on the employee's paystub so not everyone realizes this. FICA/SE taxes are not 30%. They are at most ~15%, including the employer portion. Employer also pays FUTA tax, and has additional payroll expenses (like fees and worker compensation insurance). The employee's FICA portion is limited up to a certain level of earnings (110100 this year, IIRC). Above it you only pay medicare taxes, not social security. S-Corp earnings are not taxed at 15%, these are not dividends. They're taxed at your ordinary income rate. You don't pay SE taxes on it, that's the only difference. I hope you're talking about tax treatment decision, because there are entirely different factors to keep in mind when you're organizing a business and making a decision between being it a LLC or a corporation. I believe you should pay some money to get a real advice that would apply to you, from a EA/CPA who would be doing the number-crunching (hopefully correctly). I'm a tax practitioner, and this answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. "Yes, you can. See the instructions for line 29 of form 1040. Self employed health insurance premiums are an ""above the line"" deduction."