making some $$$, what's the tax situation?

[angelicGrace]

Well for those of us in the USA why not go straight to the source on who has to do what.

Right from Uncle Sam's fav. website...The IRS:

Self-employed individuals, sole-proprietors, independent contractors and persons who have net earnings of $400 or more are required to pay self-employment tax by filing Schedule SE (PDF), attached to their Form 1040, U.S. Individual Income Tax Return. Employees of a church that receive income of $108.28 or more, but do not receive a Form W-2 for the earnings must also file pay self-employment tax by filing a Schedule SE, attached to Form 1040, U.S. Individual Income Tax Return.

As a self-employed individual (someone who owns an unincorporated business) or an independent contractor, you are required to report income and expenses on a Schedule C (PDF) or C-EZ (PDF) and calculate your earnings (scroll down to Figuring Earnings Subject to Self-Employment Tax) subject to SE tax. The completed Schedule SE will be attached to your Form 1040, U.S. Individual Income Tax Return.

As a member of a partnership that carries on a trade or business, or as a member of a Limited Liability Company (LLC) that chooses to be treated as a partnership, your distributive share of its income or loss from that trade or business is included in your net earning from self-employment. These entities must report the business income and expenses on Form 1065, U.S. Return of Partnership Income, along with a Schedule K-1 reporting each partner's net income or loss. You must file a completed Schedule SE attached to your Form 1040, U.S. Individual Income Tax Return.

If you have employees, you must pay employment taxes, including Federal income, Social Security, and Medicare taxes.

If you manufacture or sell certain products, operate certain kinds of businesses, use various kinds of equipment, facilities, or products, or receive payment for certain services, you may need to pay excise taxes.

Estimated tax is the method used to pay (including SE tax) on income not subject to withholding. You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax, of $1,000 or more when you file your return. Use Form 1040-ES (PDF) to figure and pay the tax.

source

Ok it's takes either a lawyer or a finiacial expert to understand that mombo, possibly both. But the over all idea is, if you make more than $400 (in a year presumably) you should pay estimated self-employment taxes during the year. By paying during the year, you save yourself a big bill come April 15th. Though you may still have a bill, it should be substantialy smaller than it might have been had you not pre-paid.

I have reciently been giving thought to starting my own web-based business so it was nessisary for me to hunt down and attempt to figure out what the mumbo jumbo ment.

Though I would agree with the sentiments stated to concult a tax lawyer or an accountant. They are better suited to inform you what and how is the best way for you to proceed. I mean if you aren't gonna be making boat loads of cash, they may tell you to not make the estimated payments, just set aside funds to pay at the end of the year. Or they may suggest other options like becoming and LLC. or whatnot.