Do small business pay tax back to the government? Im a contractor and run my own small business.?

Joie Libutti: You may be confusing your business net profit with a salary earned by an employee. Is your business incorporated? If not, then you don't get a salary. Your taxable income is your portion of the business net profit. If you own 100% of the business, then all of the profit is yours.You asked "Do small business pay tax back to the government?" Strictly speaking, the correct answer is "no" because the government doesn't send taxes to you. If your business has a profit of $50,000, your income tax will depend on your filing status, deductions (real estate taxes, mortgage interest, charitable contributions, etc.). You will have to pay self-employment tax regardless of those factors. (One half of your SE tax is deducted from your taxable income.)If you are not married, have no dependents, and your deductions are less than your standard deduction of $5,800, then your total tax liability from $50,000 of self-employment income would be $11,508. Of that $5,367 is income ! tax and $6,141 is self-employment tax. You can check different income amounts at http://www.dinkytown.net/java/Tax1040.html (The calculator is for 2011, but the difference between 2011 and 2012 is small.)If you are self employed, then you need to make quarterly estimated tax payments. I highly recommend that you get help from a tax professional.I hope this helps.Gary...Show more