What corporation tax am I required to pay as an independent contractor?
"The difference between the provincial/territorial low and high corporate income tax rates is clear if you read through the page you linked: Lower rate The lower rate applies to the income eligible for the federal small   business deduction. One component of the small business deduction is   the business limit. Some provinces or territories choose to use the   federal business limit. Others establish their own business limit. Higher rate The higher rate applies to all other income.    [emphasis mine] Essentially, you pay the lower rate only if your income qualifies for the federal small business deduction (SBD).  If you then followed the small business deduction link in the same page, you'd find the SBD page describing ""active business income"" from a business carried on in Canada as qualifying for the small business deduction.  If your corporation is an investment vehicle realizing passive investment income, generally that isn't considered ""active business income."" Determining if your business qualifies for the SBD isn't trivial — it depends on the nature of your business and the kind and amount of income it generates.  Talk to a qualified corporate tax accountant. If you're looking at doing IT contracting, also pay close attention to the definition of ""personal services business"", which wouldn't qualify for the SBD.  Your accountant should be able to advise you how best to conduct your business in order to qualify for the SBD.  Don't have a good accountant?  Get one.  I wouldn't operate as an incorporated IT contractor without one. I'll also note that the federal rate you would pay would also differ based on whether or not you qualified for the SBD.  (15% if you didn't qualify, vs. 11% if you qualify.)   The combined corporate income tax rate for a Canadian-controlled private corporation in Ontario that does qualify for the small business deduction would be 11% + 4.5% = 15.5% (in 2013). Additional reading:"
"There are two different issues that you need to consider: and The answers to these two questions are not always the same.  The answer to the first is described in some detail in Publication 17 available on the IRS website. In the absence of any details about your situation other than what is in your question (e.g. is either salary from self-employment wages that you or your spouse is paying you,  are you or your spouse eligible to be claimed as a dependent by someone else, are you an alien, etc),  which of the various rule(s) apply to you cannot be determined, and so I will not state a specific number or confirm that what you assert in your question is correct.  Furthermore, even if you are not required to file an income-tax return, you might want to choose to file a tax return anyway. The most common reason for this is that if your employer withheld  income tax from your salary (and sent it to the IRS on your behalf) but your tax liability for the year is zero, then, in the absence of a filed tax return, the IRS will not refund the tax withheld to you. Nor will your employer return the  withheld money to you saying ""Oops, we made a mistake last year"".  That money is gone: an unacknowledged (and non-tax-deductible) gift  from you to the US government. So, while ""I am not required to file an income tax return and I refuse to do voluntarily what I am not  required to do""  is a very principled stand to take, it can have monetary consequences. Another reason to file a tax return even when one is not required to do so is to claim the Earned Income Tax Credit (EITC) if you qualify for it. As Publication 17 says in Chapter 36, qualified persons must File a tax return, even if you:   (a) Do not owe any tax,   (b) Did not earn enough money to file a return,   or   (c) Did not have income taxes withheld from your pay. in order to claim the credit. In short, read Publication 17 for yourself, and decide whether you are required to file an income tax return, and if you are not, whether it is worth your while to file the tax return anyway. Note to readers preparing to down-vote: this answer is prolix and says things that are far too ""well-known to everybody"" (and especially to you), but please remember that they might not be quite so well-known to the OP." This sounds very like disguised employment. You act like an employee of the company, but your official relationship with them is as a contractor. You gain none of the protection you get from being an employee, and this may make you cheaper, less risky and more desirable for the company who is hiring you.  Depending on your country you may also pay corporation tax rather than income tax, which may represent a very significant saving. Also, the company hiring you may not have to pay PAYE, national insurance, stakeholder pension, etc. This arrangement is normal and legal providing you genuinely are acting as a subcontractor. However if you are behaving as an employee (desk at the company, company email, have to work specific hours in a specific location, no ability to subcontract, etc.) you may be classified as a disguised employee. In the UK it used to be common practice for highly paid employees to set up shell companies to avoid tax. This will now get you into hot water. Google IR35 It sounds like your relationship in this case is directly with the recruiter. You will have to consider if the recruiter is acting as your employer, or if you remain a genuinely independent agent. The duration of your contract with the recruiter will have a bearing on this. In the UK there are a whole series of tests for disguised employment. This is a good arrangement provided you go in with your eyes open and an awareness of the legislation.  However you should absolutely check the rules that apply in your country before entering into this agreement. You could potentially be stung very badly indeed. Marketing strategy by far was and continues to be the biggest problem.  Choosing and setting up things like corporate entity, billing, data backup, calendars were a distant second problem.  Labor law is too confusing for me to hire anyone but independent contractors. Since your YouTube income is considered self-employment income and because you probably already made more than $400 in net income (after deducting expenses from the $4000 you've received so far), you will have to pay self-employment tax and file a return.  This is according to the IRS's Publication 17 (2016), Your Federal Income Tax, so assumes the same rules for 2016 will remain in effect for 2017: You are self-employed if you: Carry on a trade or business as a sole proprietor, Are an independent contractor, Are a member of a partnership, or Are in business for yourself in any other way. Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if: Your net earnings from self-employment (excluding church employee income) were $400 or more, or You had church employee income of $108.28 or more. (See Table 1-3.) Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business. I'd also note that your predicted income is getting close to the level where you would need to pay Estimated Taxes, which for self-employed people work like the withholding taxes employers remove their employees paychecks and pay to the government. If you end up owing more than $1000 when you file your return you could be assessed penalties for not paying the Estimated Taxes. There is a grace period if you had to pay no taxes in the previous year (2016 in this case), that could let you escape those penalties. If you qualify for the safe harbor, you are not required to pay additional quarterly taxes.  Of course, you're still welcome to do so if you're sure you'll owe them; however, you will not be penalized. If your income is over $150k (joint) or $75k (single), your safe harbor is: Estimated tax safe harbor for higher income taxpayers. If your 2014 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2015 or 110% of the tax shown on your 2014 return to avoid an estimated tax penalty. Generally, if you're under that level, the following reasons suggest you will not owe the tax (from the IRS publication 505): The total of your withholding and timely estimated tax payments was at least as much as your 2013 tax. (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen.) The tax balance due on your 2014 return is no more than 10% of your total 2014 tax, and you paid all required estimated tax payments on time. Your total tax for 2014 (defined later) minus your withholding is less than $1,000. You did not have a tax liability for 2013. You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000. If you paid one-fourth of your last year's taxes (or of 110% of your last-year's taxes) in estimated taxes for each quarter prior to this one, you should be fine as far as penalties go, and can simply add the excess you know you will owe to the next check. As JoeTaxpayer has mentioned, please consult a lawyer and CA.  In general you would have to pay tax on the profit you make, in the example on this 10% you make less of any expenses to run the business. depending on how you are incorporating the business, there would be an element of service tax apart from corporate tax or income tax. Note:  This is not professional tax advice.  If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000?  US$100,000?  I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own.  Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation.  Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising.  Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors.  Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned.   Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes.  BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder). According to this FAQ published by the state of Delaware, your annual filing fees will be: Anything above and beyond that is based on company income. If you decide to file an LLC in Delaware instead of a Corporation your annual tax is $300. As others have mentioned in comments to your original question it's worth exploring your home state or other states. Delaware is commonly used to incorporate, but if you're very small or just starting out then often times your home state can be more favorable and less costly.