Sunday, February 28, 2010
How To Handle More Than One Indie Business
In my book Self-employed Tax Solutions and on this blog I have said:
Define your business as broadly as you honestly can.The more multi-faceted and inclusive your field of endeavor the more wide-ranging your expenses and thereby the less taxes you’ll end up paying!
• A photojournalist can deduct a more extensive variety of expenses than can a wedding photographer.
• A technological consultant’s expenses will be more diverse than those of a computer repair person.
• A generalist writer – someone who might write about anything – has more assorted expenses than a sports writer.
Not only does a legitimately broadly defined business allow you more deductions it also simplifies your recordkeeping. By using a broad definition you may be able to combine two or more of your indie ventures into one.
If you have two separate and distinct indie businesses you must keep separate records for each business. That means you need to split phone costs, a trip to OficeArsenal for supplies must be allocated, same with computer use. A hassle, I'm sure you agree. But what kinds of businesses may you treat as one? Here are some questions on that from your fellow indies. Let my answers -- in red -- be your guide. I've highlighted the various professions each wishes to combine.
I know you say to define your business as broadly as possible -- but what about this: I do mostly editing and writing. Some layout, book design, this-and-that. Could call it all "communications." This past year, I've begun developing a photographic print sideline (yet to produce income, but generating expenses), and experimenting with monetizing a blog/website--well, maybe communications still applies to all that. June says: yes, this all fits as "communications."
But (what with the awful economy and all) I've also made about 40% of this year's income doing interior house painting. (Rolling on wall paint equals communicating with my client's future guests? I think not.) Also a little animal care and cleaning on the side. The truth is, I've really been scrambling to make ends meet.... June says: These could be combined into their own business, something like "home care services" but cannot be part of your communications business.
When it comes time to do my 2009 taxes I'm going to have to figure out how many businesses I "am" and how to handle that. Do I do multiple form Cs, Yes, two. one form SE? Only one. Separate out my expenses for each? Yes, for your two businesses: Communications & Home Care Services
I've pulled out your Self-employed Tax Solutions book but I don't see advice about running multiple, disparate lines of business as a sole proprietor. AND I'd bet I'm not the only Indie among your fans who has made ends meet this year by using other skills -- maybe older skills or lower-paying or less preferred skills -- and offering them as an independent professional. You are so right. I've received many emails on this topic. Maybe this could be a topic for your blog? And here it is.
Wishing you all the best,
I've worked full time as a radio creative services director since '95 (W2). I freelance on the side... I have a parent company that consists of voice-overs and sound design, online advertising, and DJ/MC entertainment. I am trying to be as broad as possible by having these "sub-companies" all under one sole proprietorship / EIN. They're all related in the sense that I'm a Marketing and Entertainment Solutions company with various divisions. June says: They all fit very well as one business.
I'm also planning on being involved as a real estate investor - which I know would be a "separate" venture. Correct.
I've been freelancing part-time since 2002. I'm in the process of getting a new tax preparer (possibly CPA for the first time). "CPA" doesn't mean he or she is indie-savvy. Read these posts tax pros - tax prep fees - tax returns .
For many years, I relied on a guy who handles tax returns for a lot of media people and freelancers and got some ideas from him... Usually anytime I travel, I "talk business" part of the time - so I deduct a portion of air, hotel, food, etc - just not sure what specific portion I can deduct. Whoa. Talking business does not make it a travel expense. Read these posts expenses -- travel .
Also, before going in to work everyday I go to the Post Office to pick up mail so I count this as biz miles. Allowed if you are leaving your home office and picking up or dropping off your business mail.
Appreciate your advice - just purchased your CD and Book.
I love your book, Self-employed Tax Solutions, your site, and your super-helpful emails. June says: Thank you!
I've been pursuing (i.e. not getting paid) a career in journalism for the last, oh, 8 years. I have finally been getting paid semi-regularly for the last 2 years. For my journalism work, I do assignments and contribute to stories for radio programs.
During the time I wasn't getting paid and to-date, I have simultaneously pursued a career as a personal assistant As a PA, I do personal shopping, make suggestions for restaurants, resorts and hotels, manage and produce parties, and manage properties and household staffs around the country. I am a PA both to develop contacts for my career in journalism and to pay expenses. June says: Massage therapy also develops contacts but you couldn't combine it as part of your journalism business.
My question is whether I can lump both of my positions together into one business? No you cannot.
Both positions require me up-to-date on news, current events, what's in style, and basically any and everything else. Same for a hair stylist or a realtor. Do you think you could combine either of those with your journalism venture? You are stretching things too far.
1) Can I legitimately call myself a "Lifestyle and Multimedia Consultant" or "Lifestyle and Multimedia Producer"? No.
Do you have a better idea? You have two businesses.
Briana San Francisco,