An item that you may want to consider is self-employment tax. When you work for another entity such as a company 1/2 of Social Security is paid by the company and the other half by you. Same is true for Medicare. Your earnings when your are self-employed are subject to the full Social Security and Medicare tax rates. This is the so-called self-employment tax and it currently stands at 15.3%. It has been as high as 20% in the recent past. The self-employment tax is on top of your income tax. Every dime you make is subject to the self-employment tax regardless of the amount of income. Even though income may not reach minimum taxable levels, that income is still subject to the self-employment tax. If you earn enough to be in the 39% income tax bracket, you could pay as much as 54.3% of your earnings in taxes,and that's solely on the Federal level. You may have to pay even more based upon the state you live in.
The nice thing about being self-employed is that anything needed to operate your business is tax deductible. An example would be medical insurance.
