What is the self-employment tax? Do I have to pay it?
Sole proprietorships that report a profit on the IRS Schedule C are required to pay self-employment tax on that profit. The self-employment tax rate is 15.3 percent of the profits of the business (the same as the total of the employer and employee’s Social Security and Medicare contributions). Sole proprietors are not subject to IRS Form 941 withholdings, but they may be required to make deposits of estimated federal and state taxes based on the profits of the business.
