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Estimated Taxes

If you are a sole proprietor (“SP”) you do not have taxes withheld from your pay.  You bill or contract for services and get paid in full (hopefully).  Yippee – tax-free funds!  No – you still have to pay but need to manage the tax payments yourself and there are penalties for underpayment.  Your estimated taxes are intended to cover your liability from self-employment tax  as well as state and federal income taxes.  Consultants are often sole proprietors.


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