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Primer: Personal Income Taxes (sole proprietorships, partnerships) Illinois

If you operate a sole proprietorship or partnership, you must pay city, state, and federal income tax just like anyone else and you are responsible for paying it directly to the government. Federal income taxes must be paid in estimated quarterly payments. These payments are due in four installments on: April 15, June 15, September 15, and January 15. These federal taxes will cover your self-employment tax which includes social security and Medicare. This self employment tax makes working for yourself expensive because when you had a boss, your employer paid for half your self-employment tax and you paid the other tax. You will now be responsible for all of it, although a portion of it is deductible.

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Supreme Accounting and Tax Services, LLC
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C Biz Accounting Tax & Advisory of Chicago Inc.
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Accounting and Tax Network Inc.
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Esp Tax Service
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If your state has an income tax, you must pay it quarterly also. Cities may have their own tax rules.

Generally speaking, you must pay estimated quarterly installments if you expect to owe at least $500 in tax for a given year. The laws governing how much tax you must submit during the year require that you either pay 90 percent of the tax you will owe by the end of the year (to avoid penalties), or pay 100 percent of last year's tax (110% if your income exceeds $150K). This means that you can submit a minimum amount of tax during the year if you want to hold on to some of your money. However, this plan only works if you are able to leave the money intended for taxes alone. Too many people spend the money that they put aside then run into trouble at tax time. If you fail to make your payments on schedule and within these guidelines, you will be liable for penalties -- plus interest on the money you owe.

Your tax preparer should provide you with forms and envelopes for making your estimated payments, or you can order these forms directly from the IRS by calling 800-829-3676.

Featured Local Company

Eric Jmba James Cpa

(773) 298-1652
9415 S Western Ave
Chicago, IL

Read more about Primer: Personal Income Taxes (sole proprietorships, partnerships)

- Primer: Employment Taxes Illinois

If you have employees on your payroll, your tax situation is significantly more complex. You'll have to keep track of payroll taxes, employee withholding, Social Security, Medicare, unemployment, disability, and worker's comp, to name a few. All of these require separate calculations and timelines for payment. These rules are very strict and complex, and if you're not in the payroll business, hire an accountant or a payroll service to keep yourself legal and punctual with all these payments.

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Regional Articles

- Basics of a General Partnership Illinois

If you have business partners, you have the option of forming a partnership instead of incorporating

- Primer: Corporate Income Taxes Illinois
- Benefits of incorporating your business Illinois
- Sole Proprietorship Basics Illinois
- Business Organization Illinois
- Cash vs. Accrual Accounting Illinois
- Getting a Tax ID Number Illinois
- Primer: Employment Taxes Illinois
- Overview: Corporations Illinois
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