Do I still owe self-employment tax if my side business loses money?

No. Self-employment tax is calculated only on net profit, so if your Schedule C shows a loss, there is nothing to tax and you skip Schedule SE for that business. Even at a small profit, you owe SE tax only once net earnings hit $400 for the year. A genuine loss can also offset other income on your Form 1040, lowering your income tax. Be careful, though: the IRS scrutinizes activities that lose money year after year and may reclassify them as a hobby, which disallows the loss deduction. Keep a profit motive, a business plan, and good records so a lean year reads as a real business rather than a hobby to the IRS.