Wednesday, November 30, 2011

I've moved!

I told you it was going to happen and sure enough it did. 

Follow me to my new blog address at

See you there ... June

Tuesday, November 29, 2011

From One Work Place To Another: It's business mileage.

The questions below about deducting auto expense were sent to me by our fellow indies. Here's a really simple answer to all of them: You may deduct the cost of going from one work location to another. A work location is any place you must be for your work.

Check out my bracketed [notes] to see if you can figure out the answer.

I have retired and moved to central Illinois. However, my previous employer in Chicago wants to hire me as part time (2 days a week) consultant. Is my mileage from my home [not a work location] in central Illinois to the office building in Chicago [is a work location] a tax deductible business mileage expense?

Chillicothe, IL

Answer: No

Hi June,

My name is Rick from Keytesville, MO. I've gotten several answers to my questions today just by reading your blogs.

Being in the clergy I have a difficult time finding someone who really knows about my tax situation. I work for an association of 26 churches. We have an associational office 40 miles away in a larger town and in that office I have an office. [is a work location] I also have an office in my home [is a work location] which I work from so I don't have to drive the 40 miles to town. I work both places about the same amount of time. I also have to drive to my churches [are a work locations] and various other locations for work [obvious work locations]. I understand that when I drive from my home office to my associational office that it considered a commute.[Not a commute unless you are going there solely to get that day's work assignment.] but if I drive from my home office straight to a different work location can I still get reimbursed for that mileage even if the work location is within 5 miles of the associational office. At the end of the day do I get to count my mileage back to my home office [is a work location] as reimbursable. Sometimes I go back to work other times just to go home [is not a work location].


Answer: All driving as described is deductible business mileage expense except the drive home.

Hi June!

I found your site just in time to file my 2008 taxes and have been bragging ever since. My friends continue to love your straightforward advice too!

OK, so I move. A lot. and always have my main office in the home. [is a work location] My current home (and for the last part of 2010 tax year) is a rented room and a separate rented studio/office/shed in the backyard. I rent both from a couple. I pay a set rate for the bedroom, we split utilities for the house that we share, and they just added $200/month for the shed space (which is only used for work). This is currently spelled out in the lease.

I travel frequently for work, and once or twice a week drive to an office for one of my main clients [is a work location]. My question: How should I claim my studio? I would like to be able to deduct miles driven from my office [is a work location] to stores [are work locations if you are buying items for your business], to meet with clients [is a work location] , or to airport to travel for work [is a work location].

Of course, I don't drive from my house to the office (I just walk a few steps).

Asheville, NC
artist - arts administrator
4 years as an indie

Answer: All driving as described is deductible business mileage expense.

Monday, November 28, 2011

No Mileage Rcords

Dear June,

First I would like to say thank you for sharing your tax expertise with so many. We need the help! Especially me. This is my first year working my own business and I'm quite lost with tallying up all the business expenses and which ones I can tally up being appropriate.

One of my main questions I need help with is mileage. Earlier in the year I worked as an independent contractor for a photography company which required me to put a ton of miles on my car driving to and from different customers homes to show them the photos. My husband told me I should have kept a book logging each and every mile from every day, including my mileage for my new business (permanent makeup).

Needless to say, I didn't realize I was supposed to keep such a log, however, would like to write off the miles. Could you please advise me and tell me if there are any other options?

Thanks so much for your help! It is very much appreciated.

Kristina, your husband is correct but why didn't he tell you sooner?!

You will need to reconstruct your time as an independent. Pull out your calendar, receipts, phone records, anything that can help recall where you went and when. Keep in mind errands that you did. A post office receipt means a trip to the post office. Same with an office supply store receipt. Then go to mapquest or the like and start charting mileage.

Every 20 business miles may say you about $3 to $4 in taxes. So you decide how much your time is worth and whether the reconstructing will be of value.

-- June

Sunday, November 27, 2011

Please Take Note

Important Notice!!!!
I am moving this blog to my new website.

On or before December 1st my blog address will change to: Please visit often.

There's other news: My eLetter, Ways Through The Maze, will be back on track. And my website has had a revamp.

Thanks to some wonderful people my new site will be up and running within days. We can all hope for no glitches.


Don't be a faux-indie.

I receive so many questions asking whether someone should choose to work as a self-employed or an employee. The simple answer is: It is not a choice. It is circumstance that determines your work status.

The complication arises because everyone wants to manipulate the work situation to his or her best tax advantage. More often it is the person doing the hiring who wants to cheat. Yup. It's cheating. It's fraud.

Who gets screwed: The one who does the hiring or the one who does the work? More often the one who does the work.

Do many get away with it? Yes, they do.

Do they get caught? Sometimes.

Are taxes, interest and penalties assessed when caught? More often, yes.

Why do workers accept an unfair and fraudulent work status? Because they need the money. If they question or complain they will not get the work because someone else will step right in to do the job as a faux-indie.

Be sure to read Employee vs. Self-employed for more info on how the IRS determines work status.

Below are four worker situations that my web visitors questioned. And there's one question from someone doing the hiring.

BTW -- I've shortened their queries a bit.

Hi June,

I graduated from dental school and found 2 part-time jobs working as a dentist in Queens, NY. Both employers are classifying me as an Independent Contractor and will file a 1099 at the end of the year.

I get paid $500/day. I think I'm supposed to be an employee since they are dictating the days and hours I'm that I'll be working and they are supplying their patients, office and supplies for me to use to treat their patients.

The thing is this seems to be the norm for dentist jobs in NYC. Every interview I've been on has only offered a 1099.

-- Jennie

[Jennie then listed many questions on how to avoid this situation, including incorporation, forming an LLC. None would be to her advantage. She is an employee.]


I work in Farmville, VA as an office assistant for 3.5 years. My problem is this: The IRS defines me as an employee. The company I work for would rather list me as a self-employed person which I have done for the past 3 years. I need to know how they should record reimbursements I receive so they do not show up on my 1099 as income. They use QuickBooks and I am the one entering the bank statements monthly. What is the best way to record these reimbursements?


[The company would "rather" list you as a self-employed. Rather?! Tahirah is an employee. The reimbursed expenses are expenses of the employer.]


I'm debating on either becoming a w-2 employee for my Dad's company or an Indie and charge his home health care business a consultant fee. I've kept my self up to date with Medicare laws for home health care and have been training individuals for Medicare billing as well as setting up their organizations. My dad's company (who has two other partners) are requesting my help and I need to let them know how I want to get paid.

Please help me in this ordeal, would this profession be considered self-employed or would it constitute a relationship. I will inform this agency the guidelines and audit patient charts and will propose a corrective action. I have never worked independently so I'm a little worried about calculating my own taxes.

I would appreciate all your help.

Thanks. Fahad
West Chester, OH

[Were Fahad to offer his services to only his father he would be an employee. But since he offers similar and related services to many others it appears he is self-employed.]


I came across your site and it's very good. I'm trying to determine if I'm an Indie. I started working for just one mortgage processing company that had only 1 client.

I signed an indie contractor agreement. So I got a 1099-MISC.

The mortgage company was my only source of income. I have a lot of freedom to do my job but all my business was paid by one company who had 1 client. They did have some control as to what banks business was done with. I had expenses but of course no taxes taken out. It will make a huge difference as far as my tax bill this year since not having worked as a 1099 person, I didn't set much aside in quarterly payments, oops!! What am I??

Broomfield, CO

[How much is a "lot of freedom?" What is "some control?" A contract does not change or negate tax regulation. This should have been discussed with the mortgage company before Harvey started to work for them. He is an employee.]

Hi June,

I'm a Self Employed Website Designer living in Ocala, FL. I started my business in 2009. I haven't the income to hire any employees at this time.

I have considered inviting a private contractor in to help out with sales and client services. He would get a percentage of any work he brings in. I've found someone with sales experience who would like to do this, but he's not self employed. What steps does he have to take to become a private contractor? And, what steps do I need to take to have a private contractor work for my business?

Thank you,
Ocala, FL

[Only if the worker offers his services to others in addition to Sandra and he also meets the relationship-control criteria may he be considered an independent.]

Saturday, November 26, 2011

Good to be back!

Hello My Fellow Indies,

I’m back. Sorry for the hiatus. My long absence was unavoidable, unprecedented, and unique – unique in the sense that it won’t ever happen again.

I have a financial and tax consulting business with an extensive list of clients, all of them self-employed. They take a considerable portion of my time. This past year the issues of one client took over much of my professional life. As a responsible hippie I did what was needed which meant months of additional work. 

Now one of my clients told me that in all the lyrics ever sung by Janis Joplin he did not find "responsible" and "hippie" in the same line. But, believe me, 'tis true.

I know that so many of you have sent me questions about your tax and financial quandaries. I can say only that I hope you have found answers from competent professionals during my absence and also that I will get to your questions ASAP. They are staring at me from my email DO folder.

Thank you all for hanging in there wih me. You've been emailing and telling me how helpful my material is. My goal: To make a lot more of it more easily available to you.

And a Happy Thanksgiving weekend to all of you.


Friday, April 22, 2011

Federal Budget 101: Your money; Where it goes

The following from a client-friend in Red Bank, New Jersey

How much do you know about the federal budget?

If your answer is "not much," you're not alone. In fact, very few people have an in-depth knowledge about the federal budget process or its impact on their daily lives.

"Federal Budget 101" is designed to give you a guided tour of the budget. We outline how the federal government raises revenues and spends money, how the President and Congress enact the budget, and how much money goes into the many different federal programs. Please visit our site.

-- June

Owner's draw is not for indies.

Hi June,

Thanks for sending me the Quicken Categories For Indies List. I will go back and get your books later.

I am having a little trouble with how to categorize a Business Draw in Quicken 2011. I keep my business account and home account as separate Quicken files. So there isn't a way to "Transfer" the money. I usually write a check from one and deposit it in the other. I will try the X Change-In category on your list when I record the deposit of the Business-Draw in my personal account.

Have a great day,

Hi Jennie,

This really calls for a lengthy explanation, but I'm going to try to make it short and clear.

Sole proprietorships don't have an owners draw situation. That's a transaction within a corporation.

A sole proprietor transfers money from one account to another. In your case it may be from a business checking account to a personal checking account.

In Quicken you may simply [hard bracket the account] in the category field.That will show the transfer in both the out and in accounts

But, if you want to give the transfer a category of its own at each side of the transfer try this:
From the going out side make it an expense category MONEY TO PSL ACCT
At the receiving side make it an income category MONEY FROM BUS CKG ACCT 

Please add a comment letting me know if this helps.


Travel Expenses Made Simple


I just received your checklist for expenses [Thank You] and I'm eager to order your book. My main confusion/challenge is categorizing travel expenses. Any suggestions &/or checklist for that?

Thanks in advance,

Dear LoriAnn,

For tax purposes, categorizing travel expenses can be very simple.  The costs fall into two categories: meals & entertainment, and everything else.  That's because everything else can be deducted at 100% while you may deduct only 50% of your meals & entertainment expenses.

Here is a list of typical travel costs:


You may read more info on travel expenses in these posts expenses -- travel

-- June

Wednesday, April 20, 2011

Time is not a business expense.

Hello June,

I heard about your business from The National Psychologist. I am a psychologist in private practice.

Here's my question:

How do I calculate maximum deductions for Continuing Education expenses? Someone told me that for each hour spent in a CE pursuit it is allowable to deduct my hourly fee. This would be in addition to the actual cost of the CE course offering.

Also, can I deduct my hourly fee for each hour I spend in reading or pursuing informal, and therefore undocumented, Continuing Education knowledge?

Thank you for your materials and information and your focus on us indies.

Patricia, PhD
Dear Patricia,

I bet that "someone" was a psychologist, not an accountant. Or else someone who just does a lot of wishful thinking.

Your time is not a business expense. Whether you use your time to learn, to treat a patient who has no money, to volunteer at that battered women's center, or to cut the grass at the church.

Generally, you may deduct as a business expense the cost of the education, the supplies for the course, the transportation to and from the course. There are many regs regarding the deduction of education costs. And there are many ways to take advnatage of education expenses, for instance, as a tax credit rather than as a business expense. Which works best for you depends on your total tax picture.

Here are some posts you might want to read:
expenses -- donated services or products
and also some on
expenses -- education-study-research

Please send this post to someone.


Thursday, March 31, 2011

Creative Freelancer Conference

Hello indies,

Please take note that the Creative Freelancer Conference this year will be held in Chicago on June 23 and 24.

Unlike a lot of conferences we've all been to, this one concentrates on the business side of your indie business. It's not filled with lots of "you-can-do-it" encouragements but actually tells you how to do it.

Ilise Benun, the talented head of Marketing Mentor and author of The Creative Professional's Guide to Money, along with HOW magazine offer this two day conference for creative indies.

Ilise starts off the conference with a session on the future of freelancing and explains how you can respond to the changing needs of the marketplace.
There's much more on why indies need a business plan, how to balance work and home life, money management for people who don't get weekly salaries, how to choose a target market, using social media for success, and how to learn from mistakes of your fellow indies -- and your own mistakes.

The conference is $525. However!!!  but you can save $30 if you sign up by April 1 -- uh-oh, that's tomorrow -- and you can get a $50 discount if you input in the discount code box during the online registration.

Check it out here Creative Freelancer Conference.

-- June

Sunday, March 6, 2011

29 Interesting Articles

Indies --

The following was sent to me by a fellow indie. It has some good info.

-- June

Hi June, I just posted an article on my site entitled “29 Financial Articles Every Freelancer Must Read” ( ). I thought the article was potentially something that would interest your site’s audience

Kimberly Lee

Friday, March 4, 2011

One day does not an indie make.

June --

I'm in Burlington, KY and I was last a director of operations at the Creation Museum (Answers in Genesis) but have been laid off for two years. I THINK I've been an indie for 1 day.

A former co-worker (lecturer/author) just left the same organization that laid me off (I was there 11 yrs)and started his own ministry. He has asked me to do some part-time admin support for him from home using his laptop and cell phone. Does that make me an Indie?

Burlington, KY

Hi Ted,

No, you're not an indie if you work for only one day. That's considered incidental income because you are not engaged in a business nor motivated by profit. You must include the income as "other income" on page 1 of your 1040 tax return.
If, however, you mean that this is the first day of working on a regular basis, albeit part-time, for a former co-worker it sounds to me as if you are an employee, not self-employed.
Take a look here Employee vs. Self-employed for more info.

-- June

Wednesday, March 2, 2011

Designer needs a saner way to organize taxes for her preparer.

June --

I do any sort of 'design' job someone ask for. Initially schooled in graphic design (pre-computer) then fell into Photostyling. That led to jobs that required architectural drawing know how, and took that to do home remodels and interior design. Have taught myself computer graphics and do some of that now too. Been doing this all for 35 years...only 15 of those as someone else's employee. Sole Proprietor status now for 13 years.

I am on your contact list and devour your newsletters. Needing a saner way to organize my taxes for my preparer. Why does this seem so overwhelming??

Thank you for the deduction list in advance. Hoping this helps. One thing I would love is a checklist or 'method' that I could use as I begin 'the big receipt sort'. I know there are computer software/programs and am willing to commit to one if I knew what was best for someone like me.

Thank you!
Lou Ann
WayAppleton, WI

Hi Lou Ann,

Way, way back when computers took up almost your entire desk top everyone was gung-ho to do their bookkeping on computer. They thought it meant an instant solution to the pile of receipts stashed in the shoe boxes. Well, doesn't work that way. A computer program doesn't work if there isn't a manual system first.

My manual method is The Most Simple System. Clients have been using it for decades. It works regardless of amount of income. It's simple. It misses no deductions, It does not require a computer. Your tax preparer will love the results. It will take her less time to do your return so her fees may be less.

I've put the entire system into a 75 page PDF that includes worksheets for your 2010 tax return. It's The Confident Indie: Five Easy Steps. Check it out.


Tuesday, March 1, 2011

An Etsy seller asks: Bought in 2009 can I deduct in 2010? Yes.

Hi June!

I am just starting out with an online crafts store through etsy.

Your website is very helpful--answering questions I had and didn't know that I had! I got your list of deductible business expenses, and I think I probably know the answer to this, but wanted to check: Can I deduct the purchase of my computer from 2009 as a business expense?

I have just begun my business in January 2011. Does it have to be an expense purchased within 2011 to claim on my 2012 taxes?

Many thanks,
Colorado Springs, CO

Dear Michelle,

The years in your question are a bit confusing so just to be clear: What happens between January 1, 2010 and December 31, 2010 are all part of your 2010 tax return. Even though that return is not completed until 2011 it is your tax return for 2010.

Yes, you can deduct something you bought in 2009 on your 2010 tax return. Here's how it works:

Let's say you started a new business on January 1, 2010 and needed a computer. You bought a used MAC from the guy next store. Paid him $3000. He had paid $5000 for it new a couple of years ago. You get to deduct the $3000 computer purchase.

The same holds for equipment, supplies, a library, etc. you already have prior to going into business. Think of it as buying something used from yourself for your business.

So if in 2009 you bought a computer for $2000 and on January 1, 2010, when you became an indie, you could have sold that computer to a willing buyer for $1400, then you have a $1400 computer that you "bought" for your business and you get to deduct that purchase.

This is called converting from personal use to business use. I cover it in my book Self-employed Tax Solutions where Caitlin Caterer goes from cooking for her family to starting an indie business and even before going into business already has much of what she needs .

I wish you success in your new venture!

PS: Is that the answer you expected?

Monday, February 28, 2011

No work? You're still self-employed.

Hi June;

I have a simple question... I worked the first 6 months of 2010 as self-employed (1099), with one job with one company, from my home office, before the contract ended. I did not work the rest of 2010 because I could not find any work.

The way I look for work is internet job board searches. I do not advertise. Pretty dirt simple. My dilemma is regarding Federal taxes... Do I prorate my utilities, real estate taxes, home insurance and health insurance premiums for 6 months or for the entire year ?



Hi Glen,

Just because you could not find work as a self-employed does not mean that you are not self-employed.

If you offer your services to the general public, and your goal is to make money, then whatever your method of looking for work you are still looking. And that makes you self-employed for the entire year -- or as long as you were looking. And you can deduct indie business expenses for that entire time.

-- June

Thursday, February 17, 2011



My wife's nanny job brought in approximately $9K this past year, but the wealthy family she works for will not reportedly be furnishing a W2 to her.

Being as honest as we can be, how (or where) can I report this $9K without getting killed on it tax-wise??

I own my own micro-business, and I also work a corporate gig as well. Any feedback will be greatly appreciated! :)


Have to tell you, Ryan. This kind of thing really bugs me. You and your wife are being ripped off! Now, I know that most "domestic" help -- nanny, housekeepers, dog walkers, etc. really need the work and there is a lot of competition, so they will do whatever the "boss" asks. And that usually means not treating the worker fairly.

It's interesting that this is coming from someone in Arizona, that oh-so-anti-illegal-immigrant state. And, of course, we know that many of the domestics who work for legitimate citizens are illegal immigrants whose pay and benefits and insurance coverage are not what the law requires. What happens when the nanny falls down the steps? No workers comp. What happens when the kids grow up and no need for nanny? There's no unemployment compensation. You get the picture.

So, what should you do? I assume you are not going to complain to the Arizona department of labor, now called The Industrial Commission of Arizona. So you must claim the income. It's claimed on a federal Schedule C. On your wife's earnings you must pay approximately 15% in social security tax and medicare tax [that's both the employee's and the employer's share]. You must also pay income tax.

There's no getting around it.


1099 As Last Resort

June, I was trying to figure out how to ask you a question on your page-but couldn't find the tab for that.

I appreciate this resource so much. I was self employed massage therapist for 11 years and now am a student RN.

My husband is a subcontractor in the construction (specifically replacing floors) field and he has a helper. His helper is not licensed like my husband is- we paid him quite a bit of money this year- he makes 25%. We never had him fill out a w-9. He is still working helping my husband. Can we still send him a 1099 and will that help protect us? He made $25,000 by helping my husband this last year.

We are going to start paying him by business check starting next week so that we have absolute accurate records of how much we pay him.

I appreciate any feedback you have.

Thank you sooooo much.

Hi Cheniah,

Sorry my site is confusing. A new one is in the works. Was supposed to be up by Thanksgiving. Then Christmas. Switched to a different web-dev company and we are now looking at April. So please hang in there with me.

Ahem! Based on your description your husband has an employee. Doesn't matter whether he's paid by check, cash, or steak dinners. If he works for your husband using your husband's tools, on your husband's schedule, and your husband could fire him if he did a lousy job or if there were no work, and the guy doesn't work for any one else then by all appearances you do not have a sub-contractor working for you.

What to do about 2010? Well, you should set up payroll and file all the back forms and pay penalties. But, my guess it that's not on your agenda. So next best is to file a 1099 and 1096.
My next eLetter, Ways Through The Maze, due out in a few days will give you info on filing a 1099 by the 2/28 deadline.


Tuesday, February 15, 2011

Don't get hung up on having a business checking account.

June --

I am starting a side business while currently employed. Trying to stay under the radar from my boss knowing about this (so please don't print unless use a different name and state).

Due to financial difficulties, I am unable to get a business checking account so I plan to use one of my personal bank accounts exclusively for business income and expenses. I use a different business name than my real name but intend to put on my invoices to make checks out to my real name.

My question is do I need to file a fictitious name with the state?

Jane Noname

Hi Jane Noname,

First things first: Read this You Do Not Need A Business Checking Account. You'll see there that as a sole proprietor who is not an LLC that there are time and recordkeeping advantages to not using a business checking account. Also, note that There are many other posts on checking accounts in my blog right here checking account .

I do not recommend sending an invoice in one name and asking to be paid in another name even if it is your own. People often do that to skirt around claiming income and it gives a non-professional feel to things. Why not bill in your own name and use a clever tag line under your name that relates to or describes your business?

You don't say what you do so I can't give you any suggestions on a name but ask your bank if a check made out to, say, Jane Noname Services would be acceptable into a Jane Noname checking account.

Here's some posts on using a business name DBA - Doing Business As .

-- June

Thursday, February 10, 2011

1099 or not, it's income.

June --

I have been a self employed massage therapist for three yrs now and always received a 1099. Last year I started working directly with clients as well. my question is this... I received a 1099 from a company I worked for but how do I report the other cash and checks I received directly from clients since I don't have a 1099 for that??? do I just combine it with the 1099 ?


Hi Judy --

Whether or not you receive a 1099, all income you earn as a massage therapist is part of your gross self-employment income.

-- June

Tuesday, February 8, 2011


June- I'm at wits end finally trying to get my books in order. Wondering if you are able to help or if you have recommendations for someone out here in Los Angeles. Found your site after google search. I'm writing this after spending the day, yet again, trying to figure out how to set up my QB accounts and after buying YNAB to try and get myself on a budget. AAAAhhhhh!!!! I'm no closer than I was 6 hours ago and need pro help on this. I'm a Freelance Multimedia Producer ... 5 years


Sherman Oaks, CA

Hi Mike,

I understand. I really do. First, forget about QuickBooks. It's way too complicated for a newbee. If you want to keep records on computer use Quicken. Buy the easiest, cheapest version. Go here for my free list of Quicken Categories For Indies .

I really should have listed that as second. Because first comes: What do you want your recordkeeping to do for you? If it's simply to give you income and expenses at year-end in preparation for your tax return, you can do that manually or on computer. If you want to go the easy, simple, manual route, take a look at The Confident Indie: Five Easy Steps . It explains a manual system and has worksheets for your 2010 tax return. Most of my indie clients prep for their tax returns using this method. It really works.

If you want monthly or quarterly reports of income and expenses, or you are really comfortable with #s and computer data software rather than prose and audio software then use Quicken.

Also, if you are going backward and redoing 2010, then I suggest manual. If you are starting to do 2011, then either/or.

Hope that helps.
-- June

Monday, February 7, 2011

Owner's Draw

Hi, June!

Sure do enjoy your column! Am curious: when using “owner’s draw,” in QBooks, wouldn’t that be considered income to me?

Thanks for your help! If that is somewhere in your blog, already addressed, thanks for pointing that out.

Warmest regards,
Anacortes, WA

Hi Rhonda,

Glad you like my column. Thanks.

I will assume you are a sole proprietor. And there is no "owner's draw" for a sole proprietor. The money you take out of you business is not your profit.

Many self-employed people have a fuzzy idea about their own business profits. They think that the weekly, monthly, or occasional checks they write to themselves -- called owner's draw in the corporate world - is their income or their salary or their profit. They are wrong.The checks a self-employed makes out to herself have no bearing whatsoever on her income, expenses, profit, or taxes. Whether you write yourself a $100 or $1,000 check every week you are doing nothing other than altering cash flow by moving money from one place to another. It's called draw because you are drawing money away from someplace.

Your income, better called "net profit," is what is left after you subtract business expenses from gross income. Has no relationship to how much money you took out or put into your business.

BTW -- for indies I urge Quicken. It is much easier than QuickBooks. Visit here Quicken Categories For Indies and I'll send you a 7-page list of income and expense categories suitable for an indie business using Quicken. It's helpful even with QuickBooks.


Sunday, February 6, 2011

Incorporation is not a tax strategy.

June --

I live in Charlotte, N.C., and have been a freelance writer for five years, although I have only done it exclusively for the last two. (Before that I also worked part-time at a newspaper.)

Anyway, I've gotten a lot of work from higher-paying publications last year, and two of them gave me mid-year per-word raises because they liked what I was doing. The result has been that my income is greater than I expected. wondering if maybe at this point incorporation makes sense as a tax strategy.

I earn $70,000 annually working 25 hours a week. (I have three kids under age 7 so I don't work full-time now but I expect to work more and see my income increase as my kids get older.)

The Department of Labor says it expects "reporters and correspondents" to make $16 to $20 an hour or $43,000 a year. What do you think?

Charlotte, NC

Hi Michelle,

First, let me congratulate you on successfully freelancing as a writer. It's not easy. I think the DOL knows little if anything about reporters and correspondents or the publishing industry as a whole. Newspapers are falling by the wayside. Reporter clients of mine are being let go and they are heading onto the freelancer highway. A really good piece about this is in the December Harper's, "Bright Frenetic Mills" by Thomas Frank.

Do not incorporate. Incorporation for independent professionals should not be part of "tax strategy." So cross it off the list ASAP.

What you need to do to reduce your tax is similar to what you'd need to do if your are putting together a feature story. As my husband, a reporter for decades would say, you can't get too many facts and you can't check them too often. So here's where to start:
1. Learn what is deductible
2. You have three kids and that means a really busy life, so make your recordkeeping as simple as possible.
3. If you make more money than you need to live on, look at the many different kinds of pensions available to indies.
4. Find an indie savvy tax pro.

The most difficult is #4.

#1 and #2 are fully explained in my book. It's available at most libraries or you can buy it here Self-employed Tax Solutions.

#3 Maybe by the time you're ready to contribute to a pension I'll have an indie pension overview available.

I wish you continued success.

-- June

Saturday, February 5, 2011

!! Techno Problem !!

Hi Indies,

FYI: My site is temporarily [we think!] down. And yesterday's email got all messed up. So, please try again, later.

-- June

Saturday, January 29, 2011

Worksheets For Your 2011 Tax Return + Easy Recordkeeping

Fellow Indies --

Here are your Five Easy Steps toward becoming
A Confident Indie.

This is the second edition of Five Easy Steps
and it includes
Worksheets for your 2010 Tax Return
Simple Manual Recordkeeping How-to.

Downloadable PDF
62 pages + 13 pages of additional information

For More Info Including a Table of Contents
To Learn More About The Worksheets
How To Purchase

Maze subscribers be sure to check out your discount.

Been told to “keep good records?” … Now you’ll know how.
Ready to tackle your 2009 tax return? … Here are the worksheets to guide you.
Simplify, save time, reduce stress, miss not one business deduction.

Friday, January 28, 2011

Intimidation ... no way.

I just heard from Annette, a cosmetologist in Santa Rosa, Ca. Annette said: "My accountant knows more than I do about my own self-employment taxes, and I have always felt intimidated by her. I need another tax person/advice! Thanks, Annette"

Let's think about this a moment ... the woman knows more than you do but we can assume that she's not carrying a big club to knock you over the head nor threatening you with expulsion from the swim club. So where does the problem lie?

If your third-grader came home from school and said she didn't understand the teacher but was afraid to ask a question because the teacher knew more than she did and besides the teacher scared her, what would you say? What are the alternatives for you and your daughter?

You have similar alternatives with your tax pro -- a paid professional. You are a professional business woman. You need advice on your taxes and you are paying a pro for advice.

If you have a problem doing that, here's a mental exercise: Put your tax pro in your profession. Get a mental picture of her with the lotions, ointments, steam machine, hot towels and everything else needed for a facial including the 55-year-old customer who asks that you make her look 45 for her son's wedding. A pretty absurd scene when you see your tax pro standing over the customer without a clue what to do next. Keep that picture in mind and maybe the intimidation lessens.

If that doesn't work, bring a friend or business colleague to your tax meeting.

Or, prepare a list of questions on paper and present the list of questions in writing to your tax pro.

And most important: Learn more. Read my blog, my site, check out my book from the library or buy a copy here Self-employed Tax Solutions.

And by all means, remember that you are a professional woman in business. It is your "indie job description" to learn about the business side of your profession.

-- June

Tuesday, January 18, 2011

There is no limit on the # of years you may have a loss in your self-employed business.

Hi June,

Since 1980 my husband and I have had two home-based businesses, plus he works from a home office for his job with the state.

We jointly own both businesses. The appraisal & consulting has never lost money and has very low expenses. I haven't done any appraisal or assessment work since 2000 because of health problems, but my husband has continued to do part-time property tax data collection (except for the past two years).

I have been on Social Security disability since 2007, and also worked part-time at a church until May 2009.

I resigned from that position because our middle daughter was diagnosed with terminal cancer. (She died March 8th, 2010.) My own home business, arts and photography, has never made a profit.

During 2009 and 2010, neither of our home businesses were in operation because of the need to care for our daughter and keep my husband's state job going. Now that we have had almost 10 months to process our daughter's passing, we are again trying to work in our home businesses.

My husband's work doesn't create any problems for our tax accountant, but my art & photography business does. I did not sell anything in 2010, and sold under $200 in 2009. However I did continue to purchase some supplies, books and office equipment in 2010. How long will IRS allow me to continue trying to make a viable business? Our CPA thinks she can defend the lack of sales for the past two years, as long as she can prove intent to continue the business. Do you agree?

Thanks for your help.
Jeffersonville, VT

Dear Cyndy,

My sincere condolence for your loss. It is a testament to your strength and resilience that you and your husband are back at work.

There is no limit on how many years you may have a loss in your self-employed business. As long as your goal is to make a profit and you handle your art and photography endeavor in a business-like manner you may have a loss forever.

Here are some posts that give a short explanation as well as an argument for you to present to your tax pro. Your situation is more fully explained in my book Self-employed Tax Solutions.

Self-employment is about credibility.

You must have a profit in 3 out of 5 years: Hogwash!!

Hobby or Business: Are you a professional artist?

Profit Motive: You're OK as long as you want to make a buck.

Best regards,

Monday, January 3, 2011

A well-crafted question gets a better answer.

An article that I wrote recently for brought me many requests from psychologists for my expense list. Some also sent questions. The most frequently-asked question was this one, as expressed here by Dr. David from Santa Clara, CA.

How do I know if I'm paying too much year after year? Thank you.

Hello David,

Your question is similar to my asking you, how do I know if I handle personal relationships well? You wouldn't have enough information to give me an answer.

Am I referring to my relationship with my mother, my kids, my husband, my friends? Do we fight a lot? Have other people noticed and commented? What specific things are on my mind about this? Do I just feel that things aren't right? How long have I felt this way?

With taxes, as in any situation, you need to know the particulars in order to make the right choices, or give correct answers.

I would start by looking at David's last three tax returns. If they were not available, I'd ask what his gross income was last year and what was his net income for that year. Based on his answer I'd ask the next question and then the next.

Dr. David's question is often asked by indies in all professions. You might want to check out this on my website -- How To Ask A Question.


Sunday, January 2, 2011

What kind of insurance should an indie have?

Hello June,

How are you? I'm glad to have found your site. It is a great asset to us indies.

I have one question I need to ask. I need indie insurance. How do I go about getting this insurance? Is this general liability insurance or something else?

Secondly, how much does sufficient indie insurance coverage cost? Thanks for your response in advance.


Happy New Year, Tameko!

I am pleased that my site is of value to you. Thanks.

Asking how much insurance costs is similar to asking how much will my taxes be? Many factors are part of the calculation.

It depends on the kind of insurance and how much insurance you want. For instance, a policy covering a home valued at $300,000 is probably going to cost less than a policy covering a home valued at $500,000. Liability coverage for a graphic designer who never meets with clients in her studio will be less than that for a massage therapist who actually touches the body.

Insurance covers different assets, liabilities and situations. For instance:

** Liability insurance generally covers injury to another person. For instance, if a client walks into my office and trips.

** Property insurance (often combined with liability insurance) covers damage to someone's property. For instance, you break a window while cleaning it.

** Errors and Omissions policies cover mistakes in your work that impact your client.

** Workers Compensation covers injury to an employee.

** Media Liability insurance will protect you against lawsuits over what you say in your publications.

** Health insurance covers medical costs.

** And the list goes on ... life ... disability ... long term care ...

I think taxes are easy. Insurance is difficult. Think about what you need protection from. Then start by having a conversation with the insurance agent who handles your auto or home or health insurance. He or she may be able to direct you to other insurance agents. Also check with local business organizations for recommendations. I do not recommend NASE -- the National Association for the Self-employed.

More of my posts on insurance are right here insurance .

Also, for those of you who do not subscribe to my eLetter, Ways Through The Maze check out this one #32 for info on the new rules on health insurance deductions for indies.

-- June