Ask HN: Self-employed, what do you do with your tax money?

1 point·taormina··4 comments

I guess this might be a bit US-based?

I've been considering what to do with the money I'm setting aside for my quarterly self-employment taxes.

My initial thought is to toss it into a high-yield savings account so that it can make the LLC a few bucks while it's sitting around for the year.

What does everyone else do?

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Estimated taxes are paid by the individual, not the business (LLC). And whatever interest the business earns is considered taxable, which thus subjects it to FICA, i.e. business interest is effectively earned income; whereas if it's individual interest it's unearned income and FICA does not apply.

You should discuss this with a CPA. Accumulate all of your questions, schedule an hour, email them in advance, go in person to get them answered and discuss.

What you are doing is a reasonable thing. It's always a good idea to put that money in a separate account. Meaning not to commingle those funds with your personal funds.

When I was consulting I'd deposit money into the business account and then transfer some percentage to other accounts.

$5000 --> business account --> $3000 --> personal savings account --> $2500 --> checking.

Shouldn't you be sending your quarterly taxes to the government every quarter instead of sitting on it?

You should be, but at the very least you're sitting on it until the end of the quarter, no? Not to mention that it's not all due at the same time.

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