This week I had a talented woman help me present a business start up workshop in the office. She spent a lot of time talking to those attending about how and what to keep for tax records and why, because, well, it’s what she does.
But one of the most important comments she made during her hour of fame really didn’t pertain to business taxes, but to self employment taxes and contributions to Social Security. A lot of self employed people put this at the bottom of their list in terms of importance, and even try to “fudge” income information so they don’t have to pay as much into the fund.
What this brilliant lady said was, “Paying into self employment tax is the cheapest and best disability insurance a self employed person can get.” Well, I thought about it and I have to say I agree with that statement. You only have to look at someone you know on disability at a young age and realize that Social Security Disability is what keeps many disabled workers and their families afloat. Serious permanently disabling injuries can and DO happen to young workers all the time.
So, all you fledgling entrepreneurs; remember to pay in that quarterly estimate on your self employment. You never know when you will have to rely on that income to survive!