UPDATE
Susan K. Beebe, Editor
206-607-4149; beebe@carneylaw.com
A quarterly Carney Badley Smith & Spellman newsletter
online at www.carneylaw.com
Winter 1999/2000
Volume 8, Number 4
Washington Law
Business Stratgies: Alert ............................. 1
Insurance: Coverage Issues ....................... 2
Insurance: Other Disputes .......................... 3
Landowner Liability: Decision .................... 4
Assumption of Risk: Decisions .................. 5
Employment Law: Decision ........................ 5
Employment Law: News............................. 6
Construction Law: Decision ....................... 6
Environmental Law: Decision ..................... 6
Environmental/Land Use Law: Advice ...... 6
In the Spotlight ............................................ 8
In the Winner’s Circle ................................ 10
Business Strategies: Advice
Don’t forget self-employment taxes
when choosing an entity type
Every business owner has to decide what form or
entity is the best format for operating their particular
business. There are many choices: sole proprietorships,
corporations, limited liability companies, partnerships
among others. One factor that is often overlooked
when considering the various choices is whether the
business owner will have to pay self-employment taxes.
Every individual is subject to self-employment tax
on their “net earnings from self-employment.” The
Internal Revenue Code generally defines net earnings
from self-employment to mean the net income earned
by any self-employed person from a trade or business
and any individual’s distributive share of partnership
net income or loss attributable to the partnership’s
trade or business. The tax is calculated based on 15.3%
of self-employment income, up to a base amount of
$76,200 in the year 2000, with limited reductions in
some cases. Additionally, of the 15.3% tax, the Hospital
Insurance portion of 2.9% is payable on all earnings
from self-employment, not just on the base amount.
The self-employment tax is designed to be th