Do you pay tax on your first year of self employment?

Yes, you will have to pay taxes on your self employment the first year you are in business, provided of course that you make a net profit under the method of accounting that you choose to use.

If you have a net profit, you will have to at least pay the self-employment (social security) tax due. You may also have to pay income tax on the net profit. This will depend on the amount of taxable income that have, less any allowable credits.

You would be well advised to tally up your income and expenses now to see where you stand so far this year on your tax liability for 2008.