This post will be updated and appear on my new blog. Please visit at http://junewalkeronline.com/category/blog/.
Cheers,
June
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Tax Consultant to the Self-employed
Simple, Money-Saving, Audit-Proof, Tax and Recordkeeping Basics for the Independent Professional .
Includes Worksheets for Your 2010 Tax Return
On Sale during These Hard Times
Information for all self-employeds -- independent, sole proprietor, 1099, sub-contractor, indie. Tax law and regulations have a profound impact on all of you. I am a practicing accountant. I post simple and easy-to-understand answers to complex tax questions asked by you -- my fellow indies. You will learn that tax savvy and recordkeeping know-how can save you time and money as well as lower your stress and anxiety level and help form the foundation of successful self-employment.
June Walker
Tax Consultant to the Self-employed
What's an Indie?
Whether you call yourself a
** 1099 Worker
** Sole Proprietor
** Freelancer
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** Free Agent
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you are an independent professional.
The IRS classifies you as an independent contractor.
I call you an indie.
** 1099 Worker
** Sole Proprietor
** Freelancer
** Subcontractor
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** Self-employed
you are an independent professional.
The IRS classifies you as an independent contractor.
I call you an indie.
What's a business expense?
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- ** Are you an employee or are you self-employed?
- ** What to do about expense reimbursements included on your 1099
- ** Taxes: Which ones and how much does an indie pay?
- ** Estimated taxes: What are they & how much should you pay.
- ** Can an indie deduct donated time, products or services?
- ** Designers Dozen: Tax Saving Tips for the Graphic Artist
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Simple, Money-Saving, Audit-Proof, Tax and Recordkeeping Basics for the Independent Professional .
The Confident Indie: Five Easy Steps
Includes Worksheets for Your 2010 Tax Return
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About Indies and For Indies
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Contact June
About June Walker
- June Walker
- Santa Fe, New Mexico, United States
- Author, practicing accountant, workshop leader and seminar speaker -- been a tax and financial adviser to self-employed people since 1979. My talented and gifted clients work and live throughout North America and Europe. This diverse array of independent professionals, I call them indies, includes any one who works for him- or herself -- psychologists, carpenters, IT consultants, life coaches, bloggers, realtors, and attorneys. I also counsel a large number of people in the arts -- actors, writers, graphic artists, gallery owners and musicians. Before moving to Santa Fe in 1995 I had offices in New York and New Jersey. Over the years I have developed an educational approach to my work. Whether with clients or in writing and seminars I teach self-employed people that, although written for the corporate world, the tax laws and regulations can work to an indie’s advantage.
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Please note!
The purpose of this blog is to provide self-employeds with accurate and authoritative information about the business side of their indie ventures. All the information and opinion presented is for general information only and should not be acted upon without consulting your own tax professional.
9 comments:
Hi June,
In thinking of our business for the next year. We realize that we have very little liability and relatively little overhead for our computer repair business.
We set up last year as a LLC, but were thinking that probably all we really need is to be a sole proprietorship. Will there be tax problems if we switch from LLC to sole proprietorship?
I know 2006 tax season, it'll be as a LLC, but for 2007 taxes it would be sole prop.
Also, if we go the sole prop. route, do you have any suggestions as to how to get business license? Would it be a dba or just in our own name?
Thanks for your help.
Best,
Emily
HI Emily,
An LLC is not a tax entitiy. That means it's not a corpoation or a partnership. It is what you make it. If you've made it nothing, then a one person LLC is a sole proprietorship.
By the way, in order to get the best tax advantages, a husband-wife business, should not be a partnership.More on that after tax time.
Business license procedures are usually determined by the county you live in. You do not tneed to have a business license to be a business. You can learn more about this in my book, Self-employed Tax Solutions.
Best, June
Wow, June. This is exactly what I needed. A simple, clear-headed breakout on incorporation. Thanks!
June,
Thanks for the relevant topic; I'm curious about somewhat of a less common question. About 10 years ago, I got into a business with my b-in-law to do consulting work; that eventually failed, but we had created an s-corporation before that occurred.
We never dissolved the entity and I am now doing freelance consulting. He is fine with signing over his shares to me, but I'm not sure if it makes sense to take on the s-corp if there are no added benefits. It seems to me that your reasons for not creating the LLC/Corp are due to unnecessary costs; if the entity already exists, what are the reasons to go ahead with (or not to do so) using the previous entity? Do I need to use the same name as the s-corp or can I just refer to my freelance consulting "company" as a sub-entity?
Best,
Dave
Dear Dave,
#1 reason: Accountant's cost for preparing federal and state corporate tax returns. Minimum approx $1,000.
#2. Recordkeeping for a corporation is more cumbersome.
Check your state's regs re transferring ownership of a corp.
-- June
June, my husband is a student and I am a contractor. We have an S-corp formed but haven't used for anything. Our accountant is recommending that we pay ourselves a wage through the s-corp with taxes and whatnot taken out every pay period. What exactly is the benefit of doing this vs. just getting a 1099 from my client and gong the self-employed route? He says we'll save ourselves self-employment taxes but I am still not able to find a definitive answer on *how much* are we saving. The payroll service (online) itself will be about $40 a month.
Dear Sarah,
Unless you are making oodles of money not just for your services but because of your reputation -- i. e. you can charge more that an equally competent indie -- then the only way you save taxes is by cheating. That is pretending the money you receive is not all for your services but also for your reputation, so to speak, and so you avoid SE tax on the income. I say more about this on my blog.
Change tax pros.
Dissolve the S-corp.
-- June
Hi June,
I have a sole proprietorship working in the insurance/annuity field. I want to protect my personal assets. Is the LLC route better for my situation than an INC?
Thanks,
Alex
Hi June,
I'm a LLC s-corp janitorial company.
Last year I lost all but two accounts so i went from 10 employees to 1 which is myself. Things have not gotten any better and the future is not looking good. Do I keep the LLC or do I go to being self employed?
Dear Anon,
You need to read my posts on LLCs. An LLC may be a sole proprietorship, or a partnership, or a corporation.
Your question shows that you don't understand how your business is structured. That's not good!!!
Talk with your tax pro. ASAP.
-- June
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