Your Gateway to Financial Literacy
Introduction to Self-Employment Self-employment refers to individuals who earn a living by performing services or running businesses as independent contractors, sole proprietors, or partnerships without being employed by an organization or individual that pays them a consistent salary. Self-employed individuals hold control over their work schedules, have the autonomy to
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Background: What Is SECA Tax? The Self-Employed Contributions Act (SECA) tax is an essential levy enforced by the U.S. government primarily aimed at self-employed individuals, requiring them to contribute to the Social Security and Medicare tax funds. As they are both their employers and employees, these professionals must pay taxes
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Introduction to Payroll Taxes Understanding payroll taxes is essential for investors as these taxes impact their financial planning, particularly when calculating net income and cash flow. Payroll taxes are levied on wages, salaries, bonuses, commissions, tips, and other forms of compensation an employee earns. In the United States, both employers
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Introduction to Honorarium An honorarium is a form of payment given voluntarily to an individual for providing services where fees are not legally or traditionally required. The concept of an honorarium dates back centuries, originally used in academic and religious settings. Today, honoraria are prevalent across various industries, including finance
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What is Earned Income? Earned income represents the revenue derived from an individual’s employment or self-employment activities. It encompasses various forms of compensation, such as wages, salaries, commissions, bonuses, and tips, which are earned through personal efforts and labor. Conversely, unearned income, also called passive income, arises from investments, rental
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What is Annualized Income? Annualized income is a useful estimate of an individual’s or business’s total earnings over the course of a year based on less than 12 months of data. The calculation process involves determining the average monthly income and then multiplying that figure by the number of months
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