"vector_sigma" <galactic_war[at]yahoo.com> wrote:

- quote -

No, as a sole prop, you pay personal income tax and
self-employment tax on the net income from your business.
The business is a "disregarded entity": it pays no income
tax, but all its income is taxable to you personally. You
also pay California state income tax. If you have a middling
good year and end up, say, 25% bracket Federal and 8%
bracket California, this still comes out to a marginal tax
rate of about 45% (once you add in self-employment tax and
take an itemized deduction for state tax).

--
Chris Green

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Hi all:

I am currently a sole proprietor, and I have a TIN number. I
have never been married, and I live in California. The big
question about the biggest threat to my income is:

If I make $100K, do I have to pay 30% (or whatever the
federal tax rate is for business that makes $100k) to the
IRS as business income, and then pay another 30% (or
whatever the federal tax is for individual that makes $100k)
as personal income tax to IRS, and then another 9%
California state income tax? So I end up keeping only a
small fraction of my labor? If so, this is regretably
unfair.

Please advise me. Thanks!

vector sigma

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