Self-Employed Tax Tips

Report
JeanMarie Hinds
October 29, 2009
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Getting Started
Start-Up Costs
Hiring Employees
Business Use of Home
Use of personal vehicle & Travel expenses
Estimated Tax Planning
Retirement Plan and other benefits
Additional Tips
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Business Structure
Employer Identification Number (EIN)
Banking
Keeping the records & accounting
Equipment versus Supplies
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A cost you could deduct if you were already
operating an active business; and
A cost you incur before the day your active
business begins.
Will be amortized over 180 months*
May elect to deduct up to $5,000 in the first year of
business
May be able to recover any remaining costs upon
disposition of the business
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Analysis or survey of potential markets, products,
labor supply, transportation, etc.
Advertisements for the opening
Wages for employees being trained and their
instructors
Travel and other necessary costs for securing
distributors, suppliers, or customers
Consulting or executive fees for professional
services
If purchasing a business, only the costs for a
general search or preliminary investigation
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Employee or contractor?
Set up accounts with the state
WDOR for withholding
DWD for unemployment
Workers compensation coverage
Employee Benefits
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1. Your use of the
business part of your
home must be:
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Exclusive
Regular
For your trade or
business, AND
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2. The business part
of your home must be:
Principal place of
business, OR
Where you meet with
customers in the
course of your
business, OR
A separate structure
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Indirect Expenses:
Utilities
Real estate taxes
Property Insurance
Depreciation
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Direct Expenses:
Furnishings
Repairs to office
Improvements to office
Depreciation
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Actual Expenses:
Fuel
License
Repairs & maintenance
Depreciation
Insurance
Plus Parking & Tolls
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Standard Mileage
Rate:
For 2009,
55 cents per mile
Plus Parking & Tolls
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Based on projection of income for the year
“Self-employment tax” is like FICA for
employees and it is due on net profit
Add to income tax to get projected tax liability
Law says 90% of estimated or 100% of prior
year amount must be paid in by year end.
Dates are April 15, June 15, Sept. 14 and Jan.
15
Underpayment Penalty will be assessed
Both federal and state estimated tax
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Depends on the biz structure
If sole-proprietor, start with IRA
Health Savings Accounts
Medical insurance
Life insurance
Disability insurance
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Time is money: Add up your own receipts
Do not assume that tax documents you receive are
correct, check them! (W-2s and 1099’s)
Bring along ALL business expense and income
records
Get tax planning advice from a tax professional
BEFORE the year ends
Consult with your tax preparer BEFORE responding
to any tax penalty notices

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