Being your own boss definitely has its perks, but don't think that you're immune from Mister Taxman! Whether working for yourself or someone else, filing your income tax is one of the two things definite in Life. You know the other one, but by then it's too late:-)

As a self-employed individual, you pay your income taxes in a variety of ways and via a variety of different Internal Revenue Service forms.

Self employment income should be reported on Form 1040, Schedule C (Profit or Loss from Business) or Form 1040, Schedule C-EZ (Net Profit from Business). Your Medicare and Social Security taxes are reported on Form 1040, Schedule SE (Self Employment Tax).

You pay your Medicare and Social Security taxes the same way you pay your income taxes. If you expect to owe less than $1,000 in total taxes, you can pay them when you file your return.

If, however, you expect to owe over $1,000, you will need to make estimated tax payments. These are made quarterly using Form 1040 ES (Estimated Tax for Individuals). You need to figure these taxes at the beginning of the year.

The self employment tax rate is 15.3% consisting of 12.4% for Social Security and 2.9% for Medicare. You must pay self employment tax and file Form 1040 SE if your net earnings were $400 or more.