Entrepreneur Gets Real About Taxes— 3 Years of Real Self Employed Tax Returns

Paying self employed income taxes can be quite a challenge, and knowing how to plan for what to pay is even harder.

It can be extremely difficult to figure out exactly what you need to pay, and nobody is sharing what they have personally paid in the past. How can you plan accurately when it it so confusing to calculate how much you should set aside? In addition to that, business owners will not share any personal information about what they paid in taxes. For some reason, tax and financial information about business and self employment seems to be completely off limits; no one wants to talk about it.

However, I am an open book and I think it’s extremely important that business owners know what to expect and can see real life examples of what other entrepreneurs and self employed individuals are paying in their income taxes. How can you plan, know what to expect, and feel confident in what you set aside for taxes if no one is sharing their actual numbers.

It’s important to me as an entrepreneur and as a coach that I be a resource for you. I want share information with you that other businesses and people are not comfortable sharing. Below you will find details of my tax returns for when my business was just starting out, when I first hit six figures, and to the most recent tax season when I earned multiple six figures.

Tax Year 2011

This was when I owned a product based business, and my total gross sales amounted to $53,033. After subtracting the cost of the goods that I was selling, the total gross income was $34,316. After deducting all of my business operating expenses, I had a net profit of just $13,417. I also had income from a W-2, and had a federal withholding of $13,997.

The total for how much I paid for my business and my self employed taxes was $1,895. In addition, I also paid $1,166 in California State taxes, which brings us to a grand total of $3,061 that I owed in taxes.

Tax Year 2017

In 2017, my photography business grossed $163,599. After deducting expenses, the total net income from the business was $89,041.

Like tax year 2011, there was W-2 income on this tax return, and I had $6,238 in tax withholding. I also paid $11,300 in estimated taxes — which means you pay your tax bill in advance. Even after the estimated tax payment, I still owed a balance of $7,341 in additional taxes. This means that from my business, the total amount of taxes owed for that year was $18,641. For California State taxes, I had paid estimated taxes in the amount of $1,830 and I had a remaining balance of $742 which means my California total tax was $2,572.

So the grand total I paid in taxes for the 2017 tax year was $21,213.

Tax Year 2021

After all of my expenses and deductions in 2021, I had a net income of $352,875. For California state income taxes, I owed $15,984. Unfortunately, I did slightly under pay my estimated income taxes, so I did have an underpayment penalty in the amount of $282 which brought the total amount due to $16,266.

In 2021, I was the sole income earner for our family of four so I did not have any W-2 income on this tax return from my husband. In 2021 estimated income taxes, I estimated and paid in $85,000 for my estimated tax payments in advance. My total tax amount for my business for 2021 totaled up to $81,178 — I did receive a refund back of what I had overpaid in estimated taxes.

While this was a look at my own unique earnings, everybody is going to have a different amount that they need to set aside for tax time. It’s incredibly important that you understand exactly how much you should be setting aside for your own unique business.

If you wondering how you can calculate what you will owe come tax time, you can learn more here.

Want to learn more about my self employed income taxes? Watch the video here!