 down here in a progressive tax system so that messes people up and it also messes people up that that they have to account for the social security and medicare the payroll taxes not just the federal income taxes because those are again are taxes that they don't even really see ever because they're pulled out of their wages and you don't even see them on the form 1040 they're totally just it's just phantom money it was lost when they're w2 employee before they even got their paycheck and they're not even really checking it or on the on the 1040 so if you're a sole proprietorship you have to take that into consideration so a lot of people get behind even though they're a profitable business because they don't do their estimated uh their estimated payments and then they they have a completely they get behind on their taxes which kind of messes them up from there so these are the withholdings let's go ahead and say put some estimated payments in so i'm just gonna just put a random estimated payment payment of let's say five thousand paid and well let's bring it up to like 15 000 we also could have rollovers from the prior period we'll dive into that later but you know the general idea is that we'd have the estimated payments that are going to roll in as well so we can see a lot of different you know components that that are happening now on top of that you also could have other planning uh components which are going to be related to business tax returns so inevitably if someone has a schedule see business if they starts to do well at some point they're going to ask or they're going to talk to someone that talks about whether or not they should they should start an LLC a pass-through entity a flow-through entity or an S corporation and you'll get into a bunch of topics about that and people that are lawyers or people that are tax professionals that specialize in the creation of S corporations and LLCs are going to be quite persuasive to say that they should go this way i'm not saying that you shouldn't do an LLC or S corporation i'm just saying that that uh you know there's incentives involved there with the people that that make money from setting up those kinds of entities so then the question so then you're gonna have those kind of questions that could come up and there's also questions with regards to other kinds of deductions that might be applicable when you have your own business such as the the if i go to page two of the deductions here you might be able to deduct an IRA because you don't have access to a 401k plan anymore right so you might be able to deduct like like an uh an IRA deduction but it's limited so then in order to be able to deduct more you could think about other kind of retirement plans a 401k is usually too complicated for a small business so possibly a self-employed SEP plan may allow a business to put more money into it and do some more planning give you a little bit more time to put the money in or simple or other qualified plan you also could have health insurance issues that's tied to the sole proprietorship and whether or not you can deduct self-employed health insurance so all these other kind of weird you know things kind of come up with the sole proprietorship so it does open up another can of worms and if you're a if you're a a business doing tax preparation you want to kind of parse out which one of those things you're you're willing to deal with and where you might say okay this is beyond me i'm going to recommend uh someone else in these areas which will cause clients to uh complain bitterly maybe but you've got to do what's you know what's what you got to do in order to keep your business plan uh business plan yes uh going so you've got to tell clients no sometimes let's put this into the our tax software over here and we'll say let's say that we have a schedule c business and let's i'm going to put the income statement in now we might talk about another worksheet that you might use to like calculate your your your schedule c income statement and then and then maybe any kind of tax versus business deductions later but i'll just put a basic income statement in here there's the hundred thousand that's pulling into my income now instead of from a w2 from uh schedule c just to mirror what's happening on the tax return and then i'm going to have the self employment tax which i'm going to say is other taxes now i could get into more detail calculating the tax we much dive into that later but for now i'm going to let the software do it i'm going to say okay software calculate the tax it's at 14129 so 14129 142 14129 that then is pulling over to the first page again so it's included in the other taxes now which is other taxes here and then i could see that on my form 1040 page 2 other taxes pulling in here and then we got half of that which is deductible on line 10 or schedule one page two right here i'm going to mirror that over here so i should have an above the line deduction which is up here which is going to be an adjustment to income i'm going to do a little formula for that i'm going to say this is going to be not alimony where where did i have it this is going to be half of self employment equals the self employment tax one other taxes that 14129 divided by 2 there's the 765 765 i'm going to pull that into the first page there it is so now my agis at 92936 and so that pulls over here just to mirror that 92936 and then the standard deduction 12950 is the same i don't have any itemized right now so i'm going to take the standard and then the qualified business income deduction now we could do another worksheet just to double check this this is one of course you want to dive into and kind of look into a bit to make sure but i'm going to let the software calculate it for now just to represent it huge amount here 15997 so i'm going to say 15997 that gets us to 63989 so 63988 so i'm off by a dollar six that's fine and then i'm going to say page two does the calculation 9,692 i'll let the software do that 9692 so i'm going to plug that here 9692 letting the software do that calculation because it's calculating based on the taxable income using the progressive tax tables so it's not just a flat rate this is the average rate which is calculating this divided by this to get the average and then we've got the other taxes which was the 14129 that means total taxes social security medicare which is the which is the payroll equivalent self-employment taxes plus the income tax gets to the 23821 23821 and then we said there were estimated payments of 15 000 so i'm going to say here's my estimated payments but that's a w2 payment so i'll just move the w2 down to the estimated payments let's do i need another area down down here i'll say insert and and uh man let's do this i'm going to format paint this up here and i'm going to say this is estimated tax payments my voice cracked payment okay payments and i'll just say this was 15 000 you might have like four estimates you might want like enough room for like four or five lines i'll make this black and white i know i'm doing this fast but i'm just trying to we're running long on the time let's do a spell checky though because your spellings horrible your spellings horrible it's ridiculous the other guy spelled it right what are you talking about let's insert this is going to be total estimated tax payments summon it up on the outside summon it up and then we'll put that brings it over to the first page so there's our payments gets us to the 8821 and so over here we're on 8954 there's a 133 penalty so i'm going to say 133 let's put that the penalty 8954 8954 so i know i did this worksheet quite quickly we built this worksheet in another uh section when we were looking at individual income taxes so if you haven't seen it built it might look a little bit overwhelming but the idea is here that we can do a double input into a system like this double checking our numbers and also kind of seeing where things go a little wrong and we can we can dive into them a little bit more so hopefully it helps us to kind of double check things and solve data input errors or find data input errors as well as look at those areas where we should get a little bit more understanding of what's happening