As I slowly began my owner operator small business- I'm trying to grasp the taxes and how they work. If I lay the general base down- as I learn more I can build off of that knowledge.
I keep reading as a sole proprietorship, I will be reporting the revenue on my personal income. Prior to this, I would have thought the business is taxed- then it pays me some and I get taxed but it sounds like "i" pay the whole thing- but what is that tax rate? Since its on my personal taxes- does the standard brackets apply? I am also aware that some portion of that is paid to FICA- about 15% (where normally I'm paying half of that from a w2 job??) But how is the amount determined if I'm not receiving all of the business income? For example it makes 72K the first year. I deduct 24K. I'm left with 48K for the business- do I pay the FICA on that total amount? What other "across the board" taxes am I missing for the taxable portion? My personal, and the FICA? State too I suppose.
If anyone can lay out some examples- it will help me learn more. I understand each section has multiple learning points. But I'm trying to grasp the general idea. Thanks
