Warren Has $62,400 of Net Income from His Sole Proprietorship

question 4

Essay

Warren has $62,400 of net income from his sole proprietorship. How much is his self-employment tax on this income in 2018?

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Definitions:

Operating Expenses

Costs associated with the normal operations of a business, including sales and marketing, research and development, and administrative expenses.

Indirect Method

A way of reporting cash flows from operating activities by adjusting net income for non-cash transactions and changes in working capital.

Net Income

The profit of a company after all expenses and taxes have been subtracted from total revenue.

Operating Activities

Transactions and other events related to the core business operations of a company, including revenue and expense transactions that affect the net income.