All Modules
Part 2 of 12FREE

The Government Wants Their Cut

Taxes & Compliance

Situation

David made $118,000 last year. He's proud of it. First year breaking six figures. He's done his Venmo transfers, paid his suppliers, reinvested in equipment. On April 14th, his accountant calls. 'You owe $31,400. By tomorrow.'

What do you do?
A) That can't be right. I paid some taxes already.
B) I've been setting aside 30% of every deposit. I'm fine.
C) I knew this was coming. I have the money and I paid quarterly.

The Tax Nobody Warned You About

15.3%
Self-Employment Tax
On 92.35% of net profit, Social Security half capped at the annual wage base
~30%
True Effective Rate
SE + Federal + State stacked
Scenario

You collect $120K revenue. Spend $40K on expenses. See $80K net. Feel great. April 15 arrives.

What happens next?tap to reveal

The government doesn't send you a bill. They expect you to figure it out. If you don't, they add penalties on top.

The Quarterly System

Apr 15
Jan-Mar
Jun 15
Apr-May
Sep 15
Jun-Aug
Jan 15
Sep-Dec
The System That Works
Separate savings account. Every deposit, immediately transfer 25-30% to tax account. Don't touch it. When quarterly payments are due, the money is there.

Deductions & Traps

Deductible
Rent, supplies, insurance, marketing, vehicle (76 cents/mi, Jul-Dec 2026; confirm the current IRS rate), equipment (Section 179), health insurance, retirement contributions, professional development
Not Deductible
Personal expenses through business, regular clothes, commuting, political contributions, fines, groceries
Home Office
Must be used regularly and exclusively for business. Not the kitchen table. A separately identifiable space qualifies; the IRS does not require a permanent partition or a door. Simplified method: $5/sq ft up to 300 sq ft = max $1,500.
Scenario

You sell online consulting from Hawaii to clients in Texas, California, and New York. You don't think about multi-state tax obligations.

What happens next?tap to reveal

Calculate Your Real Tax Bill

2026 tax year estimates
$
$
From The Practice

The owners who never get the April surprise treat taxes as a weekly habit, not an annual event. Track your obligation in real time: every deposit, set aside the 25-30%, and watch the running total so the quarterly number is never a shock.

Knowledge Check

Self-employment tax rate?

7.65%
10%
15.3%
25%
Takeaway

The government does not send you a bill. They send you penalties for not knowing. Save 25-30% of every single deposit, automatically, immediately, before you spend a dollar. This is not discipline. It is math.

Pass the knowledge check above to complete this module.

Educational use only

This course is general business education, not legal, tax, accounting or insurance advice, and no client relationship is created by using it. Rules vary by state and by situation, and rates and thresholds change. Calculators here are estimates meant to frame a conversation, not to produce a filing figure. Confirm anything that carries money or liability with a CPA, attorney or licensed broker who knows your specifics.