Driving to see clients

June --

My wife started working as a contract employee doing work for Area Agency on Aging. She works directly with clients to set up services for them requiring her to drive out of town weekly. Can we deduct the business portion of the purchase of an automobile for her to drive to see her clients.

Gary in Nebraska


Dear Gary,

Apologies for this late response. Your email was lost in the virtual forest. For an answer, read tip # 2 in Designers Dozen: Tax Saving Tips for the Graphic Artist and also Auto Expense: From one work location to another .

They tell you what is business transportation and which isn't.

Then read Two Ways to Calculate Auto Expense on my website which will explain whether you can deduct the cost of your car.

Best regards,
June Walker

To learn more about indie taxes and Self-employed Tax Solutions please visit http://www.junewalkeronline.com

Very Simple Recordkeeping

Here's an abridged version of email I received from a distraught indie in North Carolina. You may be surprised at my response to him. Take a look.



June –

I am a self employed web developer and have really fouled up my financial life and have been in denial of the situation and desperately need to turn things around.

I don't see this as an excuse but I am young and being self employed kinda just happened and I have really messed up my financial life as the result of this. I am in need of help. No millions of dollars in debt kind of help but to the point where if I ever want to own a house or have decent credit I need to do something.

Often the most scary part of a situation is just not knowing where you stand and that is how it’s been with my finances, pretty sad but true.

I filed a return for 2005, though I pretty much owe money on all of them still. So hard to catch up on it once you get behind.

Mid year I started putting some money away in a CD so I couldn’t touch it, and didn’t think when I started it but I cannot get that money out until May.

I have to admit that with this stuff my brain just shuts off. It is difficult for some reason. I get overwhelmed by just the thought of taxes and my situation and all I need to do.

Do you still take on clients? If so, would you take me on as a client?

Jim in Raleigh, NC


Dear Jim,

The bad news is that you were in denial and your financial life is really fouled up. The good news is you're young so it can't have taken hold for so long that it’s unchangeable. If it's going to take time to straighten out, you've got a lot of years ahead of you in which to do it..

Before we talk about being a client or specific tax years. Let’s look at where you’re at and how to move out of that spot.

You’re a web developer so I'm sure your brain can handle taxes. It's not your brain that shuts off. The shut off valve is somewhere else. You need to figure out where it is and whether or not you want to turn it on.

A few days ago I went to meet with a website design/developer company in Santa Fe, Studio X . After speaking with the folks there and then coming home to tell my husband about it I realized that the relationship of me and my website is a lot like a client and his taxes . To have a good website, I can't just rely on the experts to do it. I must have a lot of input and do a lot of the thinking and planning myself. If I don't, my site won't do what I want it to. I have to make a choice about how much time and effort I want to put into it. Same with you and your taxes and recordkeeping.

You need to decide whether or not you want to learn about the money side of your business. You don't have to. All you must do is record and claim all income, and pay taxes. The government doesn't care about expenses if you choose not to deduct them. And if you decide that, for you, the time is better spent working rather than recordkeeping, then that's OK. The result: You spend less time on money chores but you spend more money on taxes.

You see you do have a choice.

Best regards,
June

To learn more about indie taxes and Self-employed Tax Solutions please visit http://www.junewalkeronline.com/

Sole Proprietor as an LLC

June --

I am a signage broker: I design, subcontract construction and installation of business advertising and identification signs.

Without operating my business as a corporation, or llc, my insurance agent has informed me he has no insurance product that will protect my personnel assets in the event of a company liability claim. Since you advise against forming a corporation, how then should a sole proprietor provide for this financial risk?

Jerry


Hello Jerry,

An LLC, limited liability company, is not a corporation. You may form an LLC as a disregarded entity. That means that you can be an LLC sole proprietorship. In this way you get ease of formation and recordkeeping along with asset protection. If you need even greater protection than afforded by an LLC and liability insurance then a corporation may be the way to go. But, before you do that, discuss it with a business attorney in your state -- not your insurance agent -- and make sure that you understand all the alternatives.

Be sure to read my post LLC? Incorporate?

I also recommend a book by Anthony Mancuso -- LLC or Corporation? How to choose the right form for your business. It's simply written and gives you a lot of basic information.

Best,
June

Self-employed or Employee: It's more than a name

June --

My boss decided to put me on a 1099. Just wondering what percentages I can expect to be taken based on a 15 dollar per hour wage at 40 hours per week, no write offs.

Thank you so much for your time.

Thanks, Eric


Eric, stop the train!!!

The difference between self-employed and employee is not just a matter of changing what you're called. Your boss cannot just "put" you as an independent contractor. If he's done this without any consultation with you, then most likely he's doing it to try to save money -- on insurance, benefits, workers compensation and payroll taxes.

Take a look at this column on my site: It's all about relationships: Are you an employee or are you self-employed?

If you are self-employed you should plan that about 30% of your income will go to taxes. For an explanation, check this out on my site Taxes: Which ones and how much do I pay?

-- June

To learn more about indie taxes and Self-employed Tax Solutions please visit http://www.junewalkeronline.com/

Not filed a return for many years? Here's where to start

Hi June,

Received your book, Self-employed Tax Solutions, from Amazon and can't wait to dive in and then to tackle my 6 years of back taxes. Hopefully with the book holding my hand, I can do it.

I just discovered boxes of tax materials and bank statements from up to 20 years ago. I hope I'll find (in your book?) that I can toss them.

Thanks again for your help.

All the best,
Beth ... music business


Hi Beth,

Here's a link to my site on how long to keep records, How long to keep tax records . There is a longer explanation in my book starting on page 138 and there's also something about record storage which starts on page 189.

When tackling six back years of tax returns, the task can be daunting. While you're doing it, rather than overdoing it, take your time; take lots of breaks. It’s a lot like cleaning out a closet. Here’s some steps to get you on the right path:

• Get one file box for each year. Go through each paper looking at dates only. Put each paper into the "year" box to which it belongs. Pay no attention to what the paper relates to.
  


• Now go through each box, sorting the paper into the following piles.

1. Personal, nothing to do with taxes


2. Income


3. Expenses


4. Investments


5. Other money related things


6. Ask tax pro


7. OK to throw away [But don’t discard these until you’ve had the returns prepared … just in case.]


8. Get out Tax Solutions and sort and tally your records as explained in the Most Simple System.

Now you’re ready to go see your tax preparer.

Cheers!
June

Auto Expense For A New Indie

June,

First, I just want to say that I am loving reading your Self-Employed Tax Solutions book! It is very informative.

Regarding auto deductions: For the first 5 months of this first year of being an Indie business woman I have not kept gas receipts. I've thrown them away after the credit card statements balanced because someone told me I will just be using the standard mileage method as my deduction. I also do not have a car payment.

If I purchase a new auto in the next few months would I be able to switch to the actual auto method for the rest of the year or am I stuck this year because I had not kept gas receipts.

Thank you, Maureen


Hello Maureen,

I'm pleased my book has been informative for you. Thanks for letting me know.

Here's some more info on auto expense:

** It is OK to estimate gas expense if you do not have all the receipts.
For instance, if you know that you get 30 miles per gallon, and your average cost for gas for the year was $3.00 per gallon, then you may divide your total miles by 30 and multiply that number by $3.00 to come up with your cost for gas.
Here's an example:
30,000 total miles per yr / 30 miles per gal = 1,000 gal Xs $3 per gallon = $3,000 for gas.]

** You do not have to be making payments on your car to have substantial auto deductions. If you bought your car for $25,000 several years ago, and on your first day of business use you could have sold your car for $5,000 you have a $5,000 vehicle that you are using for business. And depreciation for the business use of that car may be deducted on your tax return. And, as I'm sure you saw in the auto worksheet in my book you may also deduct repairs insurance, registration, etc.

** You may use one method to calculate auto expense for one car and another method for the other car, as long as both cars weren't used in the same business during the same time.

If anyone needs an explanation of auto expenses, just go to my website : How to Calculate Auto Expense and How to Keep a Record of Business Miles .

Best,
June

HOBBY OR BUSINESS: Are you a professional artist?

Artists and designers and crafts people:
Does the IRS consider you a professional?

You’ve been chosen for juried shows. You sell your work. People praise its quality and design. You think of yourself as a professional artist. But … are you a professional in the eyes of the IRS? And why does that matter?

It matters because it can have a big impact on your taxes, especially if you spend more money pursuing your art or craft than you bring in.

Let’s say that in one year you spend $10,000 more in art expenses than you bring in as sales. Also in the same year, you receive $50,000 in income from Grandma's trust fund, or $50,000 salary from your corporate job. If your art or craft activity is a business rather than a hobby, then you get to subtract the $10,000 business loss from the $50,000 taxable income. You are now looking at taxable income of $40,000 instead of $50,000.

But you may deduct the art loss from Grandma's trust income or from any other taxable income only if the IRS considers your art activity a business.

Maybe you don’t think of yourself as a self-employed designer or craftsperson in business. Perhaps you’re still at the thinking-about-it stage of making your art your work or you love what you do so much you don’t think of it as a business. You may believe you’re not self-employed because you haven’t made any money. Or perhaps you know you’re in business but work only part-time at your art and doubt that the IRS would think you’re a business.

The IRS criteria on the issue comes in two parts.
· The first: Are you self-employed or are you an employee?
· The second: Are you doing what you’re doing as a hobby or is it a business?

With regard to the first question, the IRS has put together a guide to help determine whether someone is self-employed or an employee. The focus of that guide is upon a single issue – the issue of control. It looks at things like whether you use your own methods and set your own hours? Who directs and controls the money, that is, who pays the expenses of the business -- customer or worker?

To get an idea of how this works, here’s an example of two self-employed artists:

Glen Glass has a client who wants stained glass candle holders designed and made by July 1 as an anniversary gift for his wife. He will pay Glen $1,000. On July 1 the candle holders are ready. The client likes them. He gives Glen a check for $1,000.

Trixie Trinkets designs and makes jewelry. She sells a silver necklace to her friend for $1,000.

In neither case did the customer have any control over what hours to work, what supplies or equipment to use, or any other aspect of production. The customer is free, of course, to cancel the order or not buy the product but even that may be regulated by contract.

Both Glen and Trixie are self-employed. There’s more info on employee vs. self-employed at It's all about relationships: Are you an employee or are you self-employed?

Here’s the part that confuses many artists. Just because you are self-employed does not necessarily mean that you are also a business. This is where the second criteria comes in: The IRS says: “In order for you to be engaged in a business rather than a hobby the goal must be to make a profit.” But how do you prove to the IRS that your goal is to make money if you make no profit? Well, you have to show that you have a profit motive.

The IRS lists nine guidelines that will help you determine -- in case you had any doubts – whether you’re doing whatever you’re doing to make a buck. No single item on the list settles or resolves the issue, and the list includes items such as:
· Do you carry on your work in a businesslike manner? For instance, do you keep accurate records of income and expenses?
· Do you strive to learn more about your work? For instance, do you visit museums? Take design courses? Do you have business cards? Do you have copies of juried show applications you submitted?

Let’s look at a hobby and a business.

Aunt Ada lives nicely off the income generated from her investments. She enjoys quilting. She has given her quilts to nieces as wedding gifts and every once in a while an acquaintance or relative buys a quilt she’s made. Ada does not advertise. She sees her quilting income as play money. Whatever she makes she spends in Atlantic City testing her gambling skills.

Based on these facts, Aunt Ada has a hobby. If Ada sells $1,000 worth of quilts in a year she is allowed to deduct up to only $1,000 in quilting expenses, even if her costs were more than $1,000. Why? Because hers is a hobby, not a business.

Trixy Trinkets, unlike Aunt Ada, has no investments. She works as a design assistant at a clothing store where she earns $40,000 a year. Evenings and weekends she designs and makes silver jewelry. Unable to keep up with the requests of those who want to buy her unique pieces, she cuts back on the hours at her clothing store job to devote more time to designing, creating and selling her jewelry. She’s not sure how long it will take, but she’s determined to leave the clothing store eventually and make a living as a jewelry designer. She was an excellent apprentice to a highly respected silversmith in her town and even helped him redesign his studio. She keeps careful records of how long it takes her to complete each piece and sets her prices by her records and the going market rate. She advertises and keeps a record of income and expenses.

Based on these facts, Trixy is a self-employed jeweler. She is in business -- even before she quits her regular job.

If Trixy sells $1,000 worth of jewelry, she may deduct any amount of business expenses that she incurs even if they amount to many thousands of dollars. If Trixy has a net loss from her jewelry design business, that loss can be deducted from her other income and could reduce her taxes. For instance, If her expenses total $6,000, she would have a $5,000 loss. From her wages of $40,000, she may subtract her $5,000 loss, to arrive at taxable income of $35,000.

To sum up: To prove that your art is a business, treat it as one. Show that your aim is to make money. Then, if you end the year with a loss you have proof that such was not your intention. And you can deduct your losses without fear.

Lower Taxes

June,

I have been self-employed in program and logistics management for a year and a half. Besides deductions and placing money into an IRA or 401K plan for the self employed, what are other ways to bring my tax burden down?

Thanks. Teresa


Hello Teresa,

If you want to be good at lowering your taxes you need to use the same method as you would to be good at anything else. You need to learn about the subject from the right sources and then act on the information that you get.

There are several different kinds of pensions for indies. The most flexible and least expensive for those under 50 years old is a UNI-K -- also called a solo-K. It's structured like a combination SEP plus 401-K.

In order to take advantage of every possible deduction you need to know what those deductions are. Click here for a complimentary copy of the Self-employed Business Expenses List and also read Is it a deductible business expense? on my website.

If you like what you read there, I encourage you to buy a copy of my book, Self-employed Tax Solutions, featured in BusinessWeek. The book will give you the basics for understanding how to lower your takes. It also tells you how to set up a recordkeeping system and prepares you for an audit -- all in the same easy-to-understand style you'll find in my columns.

I wish you much success.

Best regards,
June Walker

More car questions ...

June,

My company gave me a car last year for making my sales numbers over an 18 month period. The value of the car has been reported to me on a 1099 - can I deduct any portion of this?

Michellel

Congratulations, Michelle.

Yes, you may deduct all business auto expenses for that car and any other car you use for business. Read these on my website to learn more about auto deductions: How to Calculate Auto Expense and How to Keep a Record of Business Miles .

Best,
June

Free Advice

June,

I am a freelance writer . I just was poking around and would love any free information you've got! I'm worried about that number I saw on your home page Did you know? Approximately $400 of every $1,000 net self-employed income you earn goes to the governments. Is that right?

My primary employer is only giving out 1099s once this year and I've been told I'm going to get "zapped" this time next year. Any practical advice you've got for a newbie would be great.

Jesse in NYC


Hello Jesse,

I'll start at the end of your email: What do you mean by "my primary employer is only giving out 1099s once this year?"

Self-employeds do not have employers, only employees have employers. And, 1099s are sent out once a year, at year-end, just as are W-2s.

Also you ask if the $400 of every $1,000 going to taxes is right? If you clicked the link and read the column that the statement linked to, you would have known that the statement is correct.

You ask for free advice. Could it be you're looking for easy advice? If you are self-employed, you are a business and with being a business comes the responsibility of being a business person and handling your indie venture in a businesslike manner.

So, your email tells me that you need information, too much for me to provide in one email or one blog post. I recommend you start by reading a short column on my website. Try Take charge. Learn. Pay less tax. 7 Advantages of Self-employment

If you like what you read there, I encourage you to buy a copy of my book, Self-employed Tax Solutions, featured in BusinessWeek. It's not free but on Amazon it cost about only $13. The book answers many of the most common self-employed questions in the same easy-to-understand style you'll find in my columns.

And more than just answering those taxing questions, the information in Solutions will give you a firm foundation on which to build your solo venture!

I wish you much success.

Best regards,
June Walker

Quick Questions and Looming Deadlines

I got the following email on April 13 from Bob Smith. I usually don't give last names but something tells me his is a pseudonym. And, if it's not, I used to live in NJ so I know he's well hidden.


The kinds of questions I get usually can be categorized into a few areas. They are usually about specific expenses or generally what kinds of expenses can be deducted, and requests for explanations about taxes paid by indies. Sometimes I get a tough question that needs research on my part -- I'm doing one now for a cruise ship entertainer. There's always the new-to-self-employment folks who don't know where to start, and there's those seeking advice about my fellow tax professionals.

The thing is, when I get an email like the one below, my first response is: You have got to be kidding! You really expect an accurate, thoughtful response to this? And you want it in time to file your return in a couple days?!$#*&!

Well, I didn't get to Bob's email until now and I suppose he has already filed his return, but I'm hoping you, my readers, can learn something from Bob.

Bob is a financial analyst. Taxes and money are not a foreign language to someone in his profession. Well, here are his "quick questions." By the way, on my website a good while ago I wrote the column How to ask a question: "Quick Advice" or, "What is the meaning of Life." So many people start their inquiries with, I have a "quick question" that my husband assessment is, sure, the quick question is akin to "what's the meaning of life."

So, here's Bob's email and my "quick" answers in bold.

Hi - nothing like cutting it close. I worked as a self-employed consultant (as a financial analyst) last year for 3 different firms - 2 in NY and 1 in Connecticut. I worked on-site about 2/3 of the time and from my home for the remainder. I have a few quick questions:

1) What kinds of expenses can I deduct? All business expenses.
And, Bob, you never requested my free indie expenses list -- just a click away at about 4 or 5 places on my site and blog.

I was reimbursed by the Connecticut firm for mileage and tolls, but this reimbursement was included in the 1099 - where on the tax return would I deduct them? There are several columns and posts on my site and blog about how to handle reimbursed expenses. Click "reimbursed expenses" on the left side of my blog.

2)Since I was traveling from my home office to on-site offices some of the time are these travel expenses deductible (and not counted as commuting?) The room I worked in at home is not exclusively an office (worked on the family computer) so is it safe to assume I can't take a home office deduction, There are several columns and posts on my site and blog about "home office," however, I think you already know that the answer to this is: you don't qualify for home office. and that to be considered business mileage it must be from one business event or location to another.There's but I can still deduct the costs of printer supplies, cell phone, etc.? Yes, you can. And, you know what? It's all in the columns about home office. Just takes a little reading and analysis.

3) Do I need to file state tax returns for CT and NY? (I'm a NJ resident). Yup. For all three states.

Thanks for your assistance. Bob

Bob, I sure hope you filed for an extension and will plan better for next year. Also, hope you didn't mind my using your email as an education tool.

Best regards,
June

Recording Business Mileage

June --

I work as a network consultant; driving from job to job throughout the day. What types of records do I need to keep to deduct the mileage? ie... is there a specific form or format or logbook style that I need to use? Currently I just keep a running total of the miles I drive per day in an excell spreadsheet; however, I don't necessarily keep track of which miles were associated with driving to which client.

-- Mike

Mike, there is no specific format or logbook that must be used. Use whatever method works for you.

If, for privacy reasons, you choose not to note a client's name, that's OK. You could use "Client A" or "Client B." You do need to note whom you met with and why. If you go from one client or business function to another then a daily mileage total is fine. However, you still must list the business events -- such as client meeting, drive to airport, business errand, etc. --for the day including what they were, why they were, and where they were.

For more info take a look at these two columns on my website How to Keep a Record of Business Miles and How to Calculate Auto Expense .

Best,
June

Driving from home to work: Is it deductible?

Hello June,

I am a limousine driver. Can I deduct the cost of gas for getting to work and back? I was driving a company car and they paid for the gas. I was driving my car to the base to pick up the limousine.

Thanks.
Lilka in New York


Sorry, Lilka, you cannot. From home to work is considered a commute, and commuting costs are not deductible. Take a look at Auto Expense: From one work location to another .

Best,
June

Notary Public / Court Reporter

Hi June,

Let me preface by saying, this year I attempted to do my own taxes through TurboTax to have a greater and deeper understanding of same; I believe that's the only reason that this was brought to my attention. I truly don't believe this question has ever been asked of me recently by any accountant that I've used.

There was a question regarding being a notary public and that any services as such were being performed as a public official and, therefore, those services were tax exempt.

As a court reporter it is my responsibility to swear in all witnesses and to then also certify every page of the transcript as being true and correct (also why I need to be a notary) as far as what was said, the parties present, events that happened, et cetera.

I feel that being a notary is an integral part of my job and, therefore, I am not sure if I should have to pay any self-employment tax. I have thought and thought about it and I don't see how you can separate out the two and I do believe my client pays me for both services being performed at the same time. If I were to lose my ability to be a Notary I would no longer be able to report. I looked on my previous tax years and I have always paid this self-employment tax.

Any guidance and standing I would have on this matter would be greatly appreciated. Thanks so much, in advance, for all of your time.

Sincerely, April in North Carolina



Hello April,

Public officials and public officers do not have to pay self-employment [SE] tax. There is no precise definition of "public official." The IRS says it is anyone who who administers or enforces public laws and exercises significant authority. . This includes positions such as governor, mayor, member of the state legislature or school board, justice of the peace, tax assessors.

A notary public, although she must pay income tax on fees earned, does not have to pay SE tax on income.

The IRS, on its website, gives the following examples of independent contractors: "People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees ... The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax."

A court reporter or stenographer who offers her services to attorneys or anyone else needing her services is considered self-employed, that's an independent contractor, and so does not get the exemption from SE tax that public officials get. A court reporter is not considered a public employee.

Here's a decision from a court case [Allen C. Moore and Annette Moore, plaintiffs v. U.S. defendant] in California in 1984: SE tax must be paid by court reporters who were also notary publics. The court reporter's services generated business fees subject to SE tax despite the practical necessity of being notary." Being "notary was merely incident to court reporting business."

I'm sure that's not the answer you want but it was a great question.

And, I'm glad you learned something from TurboTax, but, be careful. If you've read some of my other writing you know that many tax prep programs do not do the best job for indies.

Best,

June

How to Keep a Record of Business Miles

Regardless of which method -- actual or standard -- you use to calculate auto expense you will need to know the total business miles for the year.

Easy how-to for recording business mileage.
Let’s start on New Year's Eve! A little assignment before you head out to the party: Get the mileage reading on your car from the odometer and write it in your calendar.

Next assignment: on the following New Year's Eve, once again before you go out (because you'll never remember in the morning) write that mileage reading in your calendar.

Completing those two assignments gives you a beginning and ending mileage reading for the year so you know how many miles you put on your car for the year. Now let’s see what you do between parties.

As long as accuracy is your goal, the method used is unimportant. Choose the routine that suits you and your business. Patti Party Planner, who runs all over the state checking party and convention sites and prices of supplies, and listening to bands, will have a very different method of calculating business mileage than will Rob Rolf who rarely needs to leave his massage studio. Let’s look at the different ways that they, and Lily Legal, figure out business miles.

*** Rob Rolf uses his car for business only once a month to buy supplies all he has to do is to check the mileage from studio to supply house and back and multiply it by 12 and he’s got his total business miles for the year.

*** Lily Legal goes to the court house twice a week. She has an occasional trip to a client’s office. Like Rob Rolf she does the multiplication thing to figure her court house appearances -- two trips times 48 weeks (she takes off four weeks a year to go to Aruba). And she uses her appointment calendar to determine which clients she met with at their offices. Around early December she has her clerk figure the miles from her office to each client. He writes the mileage in her appointment book and tallies them up. He adds that to her court appearance mileage for total business use mileage.

*** Patti Party Planner spends much of her day in what she calls her “business” car. She was distraught at the cumbersome way her former tax preparer told her to calculate business miles. Sammy Segar told her to write down the odometer reading every morning – 79,814.5 – and then at the end of the day write down the new reading – 80,013.6 – and then subtract. 199.1 miles. What a bother! By day’s end she was so tired that she often made mistakes in arithmetic. Patti has another car -- bigger, with a childseat, devoid of the clutter of her business car. She uses that one for just about all family errands. Patti came up with a much easier way of calculating business miles. She does her New Year’s Eve notations in the calendar. But then instead of writing down all her business miles she just notes in her calendar the few occasions she uses the business car for personal errands. She deducts her personal miles from her total miles to come up with a business use figure.

As you can see from the above examples, there is no set way to keep a mileage record. Use a method that suits you.

Want to learn more about auto expense and mileage recordkeeping? Take a look at these on my website Two Ways to Calculate Auto Expense and the expanded How to Keep a Record of Business Mileage .

What'll it cost me to leave my W-2 job for the indie life?

Hi June,

I currently work full time and my salary is 95k + bonus (8k this year). I am married, own my own home. I have no children. I have been offered a consulting position at a 1099 rate of $65 hr. My other option is $55 hr as W-2.

I am an IT professional. I have expressed an interest in taking the position as a 1099 consultant. I donate to charity at least 10% per year. My wife is employed, but I would probably make her my employee for tax advantages. I don't go to the doctor often at all and am an aggressive investor for now, not interested in the lower interest returns of 401-Ks and such. Dentist twice a year, and we own 2 automobiles, one paid off and one leased.

What is your opinion? Do you think it would benefit me to move over to be independent?

Thanks, Dan


Hello Dan,

There are two sides from which to look at your question.

For only $10 more per hour, definitely not. For a measly $10 an hour you are giving up benefits which could be vacation and sick pay, unemployment compensation, health insurance. And your employer is saving those costs. Don't think of your health costs as two dental visits per year it's the skiing accident or the fall in the bathtub or worse for which you have medical insurance. Take a look at this on my website
What'll it cost me to leave my W-2 job for the indie life?

On the flip side, you could reduce taxes substantially by being able to directly deduct all business expenses. And with your wife on payroll, if you give her good benefits like a pension and health insurance, it may make it worthwhile.

I suggest you push the company for more than $65 per hour.

Best,
June

Health / Medical Insurance

June --

I'm new to the life of an 1099er and would like to know your opinion in general on medical insurance rates and shopping around.

Chris from Plano, Texas


Hello Chris,

Everyone I spoke with said the same thing. Start with your existing trusted agent that you use for other insurance. Ask for a recommendation. Often the term agent and broker are used interchangeably but usually they are defined as: An insurance agent works for one insurance company; A broker looks to many companies to find coverage for you.

You can also check with fellow indies. You don't say what your profession is so I can't suggest specific organizations or guilds.

Do check with the Freelancers Union. It offers health insurance not only to indie New Yorkers but is expanding to other states and also has a lot of information on health insurance.

Please let me know if you find other good sources.

Best,
June