Self-employment tax
In accounting, self-employment tax means social Security and Medicare on net earnings from self-employment — 92.35% of net profit, taxed at 12.4% up to the year's wage base and 2.9% on all of it — owed once net earnings reach $400, with half deducted from income. Sole proprietors and general partners pay it on Schedule SE.
Also called SE tax.
Authority: Schedule SE (Form 1040) (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- EntitiesThe entity menu › Sole proprietorshipNo entity, no shield: the business is its owner, reported on Schedule C with self-employment tax on Schedule SE.4 min
- EntitiesHow each entity is taxed › Self-employment taxBoth halves of Social Security and Medicare, 15.3% on 92.35% of net profit, worked on one Northwind founder's share.4 min
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- FICA (the employee and employer version)
- payroll tax
Also in Entity types
Defined in Lexicon. This page is generated from that document, so the two can't disagree.