As a contractor, you receive From 1099NEC or 1099 MISC instead of W2. Taxes are not withheld from that income.
The general rule is that you must pay taxes as you earn income and hence the quarterly estimated tax payments. Meaning that when you file your tax return, if you haven't paid enough taxes through withholdings or estimated tax payments then you might owe an underpayment penalty.
To determine whether you need to make quarterly estimates, answer these questions:
- Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
- Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
- Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (Form 1040, line 8b) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax you owed for the previous year? If so, then you're not required to make estimated tax payments.
If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements above.
You still have time to make estimated tax payment by January 18 , 2022.
The same applies for your art business, you can send in the estimated tax payment by January 18, 2022.
The comedy club is where you earn wages and they withhold taxes from your wages. Therefore, no need to make any other payments on behalf of that income.
There is no requirement to set up an LLC or another form of entity for a business. You can continue as a sole proprietor. The art business and graphic design business are very similar in nature and you can put them together under one business. You may create an LLC and put income and expenses from both the art work and graphic design business under the LLC. The LLC is treated as a sole proprietorship on the tax return unless you make a different election. In short, you can file the income and expenses on Schedule C just as you would for a sole proprietorship.
One advantage of setting up an LLC is the Liability Protection that comes with it. LLCs are responsible for their own debts and obligations, and although you can lose the money you have invested in the company, personal assets such as your home and bank account can't be used to collect on business debts. Your personal assets are also protected if an employee, business partner or the business itself is sued for negligence. Again, setting up an LLC is not required.
I hope I have answered all your questions.
