The tax law can be complex, but it's important to know the basics of how you are taxed. As a business owner, you get so many more tax advantages, however. However you must understand how you are taxed so you can help minimize your tax liability.
Income Taxes (10%-37%): On top of self-employment taxes, you'll pay income taxes. This will vary based on how much income you make and your filing status.
Self-employment taxes (15.3%): A misconception is that you don't pay social security or medicare when you are self-employed as you would as an employee. This is not true. You pay 15.3% in self-employment taxes.
State Taxes: And then on top of income taxes, you'll also pay state taxes. Each state is different. Some states do not impose taxes (like my home state in Texas), other states will impose taxes on your income.
There you have it, a high-level overview of how your business is taxed.
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