 Most of this information comes from the Tax Guide for Small Business for Individuals Who Use Schedule C Publication 334 Tax Year 2022. You can find on the IRS website, irs.gov, irs.gov. Income tax formula focused online, one that being income. Remember in the first half of the income tax formula is an essence in income statement. Although just a framework, just a scaffolding other forms feeding into these line items. For example, the schedule C, our major focus here being another income statement, income minus expenses, those expenses being business deductions, the net income flowing into line one of our income tax formula. This is page one of the form 1040. The schedule C income would flow through to the schedule one, then ultimately to page one of the form 1040. This is a schedule C profit or loss from business, which is an essence in essence and income statement, income minus expenses. Now we're going to dive into employment taxes, but before we do, we want to make a distinction between employment taxes and self employment tax. We talked about in a prior presentation, they are similar, but different. When we're talking about self employment tax, we're thinking about taxes we might have to pay on self employment income, such as the bottom line net income of the schedule C for our small business. When we're talking about employment taxes, we're thinking about taxes we might have to pay and we might have to withhold on the income of our employees, the money going out. It's actually an expense to us that we might have to be paying taxes on for our payroll taxes in essence. So you can see the difference here when we're talking about self employment tax, the net income of the schedule C is being treated in a similar way as if we were an employee of our own business in a similar way as if we were the employee of another corporation, right? We're going to be paying both the employee and employer portion of our payroll taxes, social security and Medicare in the form of self employment taxes. When we're talking about employment taxes, now we are the employer and we have employees and that structure is basically the same, no matter what type of entity we have. If we're a sole proprietorship, a partnership, an LLC, a C corporation, we're going to set up our employment situation in a similar way, we're going to have to issue the W-2s, we're going to have to have the withholdings, we're going to have to pay our portion of the payroll taxes. But notice when we pay our portion of the payroll taxes, it's kind of interesting because we're actually paying taxes on an expense to us. We're paying taxes on not our income, it's not an income tax, it's income to the employee and we're having to pay social security and Medicare on the expense that we basically pay to the employee as opposed to the self-employment tax when we're paying basically self-employment tax on our income, the self-employment income treating ourselves as the employee and employer. Okay, so we're on employment taxes. If you have employees, you will need to file forms to report employment taxes. Employment taxes include the following. Note that when we talk about employees, you will not be an employee of yourself generally when you have a schedule C. If you had another type of entity such as an S corporation or a normal corporation, then you might have to actually issue yourself a W-2 because the corporation is like a separate legal entity. So that means that when you have employees for a sole proprietorship, then you will be issuing W-2s for the employees you have deducting the expenses of having employees. The net income then is going to be taxed in the format of self-employment tax with regard to like the payroll taxes. Okay, so we got social security, Medicare taxes, the federal income tax withholdings. So when we have employees, we're going to have to then deal with our portion and their portion of social security and Medicare, the payroll taxes. We're going to have to deal with the federal income tax. Don't get that confused with our federal income tax that we're going to be reporting on the form 1040. The bottom line, this is their federal income tax that we are withholding from them. So we're paying them, they're going to have to pay federal income tax, we're withholding, you know, their federal income tax. Yeah, and maybe I'll file a federal income tax return.