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,
Jennie


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.

Best,
June

Travel Expenses Made Simple

June,

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,
LoriAnn


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:
PLANE & RAIL FARES
TIPS & BAGGAGE
TAXIS & PUBLIC TRANSPORTATION
AUTO RENTALS
LODGING
TELEPHONE
LAUNDRY & CLEANING

TRAVEL MEALS
TRAVEL ENTERTAINMENT

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

-- June

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.

Cheers,
June

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

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” ( http://www.accountingdegreeonline.com/29-financial-articles-every-freelancer-must-read/ ). I thought the article was potentially something that would interest your site’s audience

Best,
Kimberly Lee

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?

Ted
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