Self-Employed Vs. Employed Taxes Tax Essay

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This issue is compounded for the self-employed when retail/sales tax is added into the mix as these payments are also required quarterly, not payable when collected. This issue is simply a non-issue for an employed person as the retail/sales tax is again paid quarterly by the employer and the employee deals only with direct transaction, calculations, most of which are done automatically. These additional taxes are collected by the individual self-employed person where they are applicable, which is the majority of U.S. states and are now even collected for some online transactions in certain states, regardless of the funds availability when they are due. So, again this is something the self-employed person must take into consideration on almost a daily basis, i.e. saving collected retail/sales tax whenever it is paid or expect to write difficult checks when taxes come due. Additionally, understanding the sales tax laws in different states where you do business is an essential bit of knowledge that the employee only has marginal responsibility for but the self-employed person is ultimately and singularly accountable for.

The actual amount of taxes that individual employees vs. self-employed individuals pay is roughly the same annually, excluding that self-employed individual will pay the percentage of some federal taxes that the employer would normally pay and therefore the self-employed do pay marginally more federal and state taxes.

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In addition to that tax preferences on small businesses have decline, in the last 10 or so years, making employment over self-employment seem wise to many (Bruce, 2002). The main difference between the two is that the self-employed person is held much more accountable for both the knowledge to make sure the taxes get paid and get paid on time and in the proper amounts than the employee who rarely has to think at all about this issue unless he or she is employed in an area of a business that deals with taxes, either way it likely does not feel like his or her money when the check is written......

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