Self-Employment (SE) Tax
Rate: 15.3% on net self-employment income — this is IN ADDITION to regular income tax and often surprises new entrepreneurs.
- Covers Social Security + Medicare for the self-employed
- Who pays: sole proprietors, partners, LLC members (default)
- This is IN ADDITION to regular income tax — often surprises new entrepreneurs
- S Corp opportunity: salary + distributions structure may reduce SE tax significantly
EIN — Employer Identification Number
A federal tax ID for your business, issued free by the IRS.
Apply online at IRS.gov — takes minutes, no cost.
- Required for: all partnerships, corporations, nonprofits
- Recommended for: all LLCs and sole proprietors with employees
- Needed to: open a business bank account, file returns, establish credit
Quarterly Estimated Tax Payments
Who must pay: any owner without paycheck withholding. Missing payments → underpayment penalties — entirely avoidable.
| Quarter | Due Date |
|---|---|
| Q1 (Jan – Mar) | April 15 |
| Q2 (Apr – May) | June 15 |
| Q3 (Jun – Aug) | September 15 |
| Q4 (Sep – Dec) | January 15 |
- Form: IRS Form 1040-ES
- A CPA or tax software can calculate your quarterly obligation
UBIT — Unrelated Business Income Tax
Applies to nonprofit organizations when they earn income from activities unrelated to their exempt mission.
- Who it affects: nonprofit organizations, 501(c)(3) and others
- What triggers it: income from activities unrelated to the exempt mission
- Examples: facility rental (non-mission), retail stores, advertising revenue
- Filing: Form 990-T, alongside annual Form 990
Faith-based orgs with mixed revenue must evaluate UBIT exposure.
Tax Filing Summary by Structure
| Structure | Primary Tax Form | Notes |
|---|---|---|
| Sole Proprietorship | Schedule C (Form 1040) | No separate business return |
| General Partnership / LLP | Form 1065 + K-1s | Pass-through to partners |
| LLC (single-member) | Schedule C (default) | Can elect S/C Corp |
| LLC (multi-member) | Form 1065 + K-1s (default) | Can elect S/C Corp |
| S Corporation | Form 1120-S + K-1s | Reasonable salary required |
| C Corporation | Form 1120 | 21% flat rate; double taxation |
| Nonprofit 501(c)(3) | Form 990 / 990-EZ / 990-N | 990-T for unrelated income |
| L3C | Form 1065 + K-1s | Same as LLC pass-through |