How to Calculate FICA for a Sole Proprietorship

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Calculating FICA for a sole proprietorship requires you to crunch some very specific numbers relating to your business. Calculate FICA for a sole proprietorship with help from a business and finance professional in this free video clip.

Part of the Video Series: Business Tips & Insurance Info
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Video Transcript

Hi, I'm Ernie Bray, and how do you calculate FICA for a sole proprietorship? Well, now if you work for a regular company and you are an employee your FICA is taken out; 6.2 percent on the first $110,100 of gross income; and 1.45 percent for Medicare. You don't even think about it. It comes right out of your check. But if you are a sole proprietor you still have to pay that on top of your federal taxes. But you might think well, okay, what happens if I don't even make that much in my little, small little business? I only make $10,000 a year, it's a side job. Well, let me tell you, you still have to pay that 6.2 and 1.45 to Medicare. That's a government requirement. Because you don't have an employer holding that out. So this is one thing you need to keep in mind when you are running a sole proprietorship. You need to set that money aside and it has to be paid as taxes at the end of the year. I'm Ernie Bray, and thanks for listening.

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