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More About This Title J.K. Lasser's Guide to Self-Employment: Taxes,Strategies, and Money-Saving Tips for Schedule CFilers
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Tax facts and strategies every self-employed person needs to know
If you're thinking about starting a business, or have already begun one, you are not alone. There are more than 23 million workers who are already self-employed and file Schedule C to report their income and expenses.
As a self-employed person you have to handle many, if not all, of the aspects of running your business. J.K. Lasser's Guide to Self-Employment is intended to help you with some business aspects with which you may not be familiar—but which have a great impact on your bottom line. It skillfully focuses on taxes as well as many legal and financial matters that may pertain to your business.
Informative and accessible, J.K. Lasser's Guide to Self-Employment is designed for you, the self-employed person working alone as a service provider, to help pin down all of the tax breaks to which you may be entitled. Divided into three comprehensive parts, this reliable resource will help you:
- Learn the basics of tax reporting: from what it means to be self-employed and an overview of what you have to report—as well as where and when—to becoming familiar with Schedule C
- Discover the various types of deductions and credits you can claim to reduce revenue that's taxed
- Become familiar with an array of planning strategies that you can use to make better business decisions throughout the year as well as other strategies you can employ as your business grows
- And much more
Don't be intimidated by taxes and other responsibilities of being self-employed. Instead, embrace the opportunities that a better understanding of tax, legal, and financial responsibilities can produce. Let J.K. Lasser's Guide to Self-Employment show you how.
Don't forget to view the free online supplement to this book at JKLasser.com for late tax changes made by Congress and other up-to-the-minute developments.
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Barbara Weltman is an attorney and a nationally recognized expert in taxation for small businesses, as well as the author of many top-selling books on taxes and finance, including J.K. Lasser's Small Business Taxes and J.K. Lasser's 1001 Deductions and Tax Breaks. She is also the publisher of Idea of the Day®, a guest columnist for WSJ.com and contributor to SBA.gov, is quoted regularly in major publications (including the New York Times, the Wall Street Journal, and Money magazine), and hosts Build Your Business radio. Visit her at www.barbaraweltman.com.
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Acknowledgments ix
Introduction xi
Part 1 Self-Employment Basics 1
1. Being Self-Employed and On Your Own 3
What Does Self-Employment Mean? 4
Legal Consequences of Self-Employment 6
Practical Issues in Self-Employment 7
Tax Terminology 8
Being 1099ed 8
What's Ahead 9
2. Getting Set Up for Tax Reporting and Business Operations 11
Preliminaries 12
Keeping Books and Records for Tax Reporting 12
Business Reasons for Recordkeeping 15
Tax ID Number 15
Tax Year 16
Accounting Method 17
Decide Your Business Name 19
What's Your IP? 21
Obtain Licenses, Permits, and Permission 22
What's Ahead 23
3. Using Schedule C 25
Tax Filing on Schedule C 25
When, Where, and How to File 31
What's Ahead 32
Part 2 Reporting Income and Expenses 33
4. Reporting Your Income 35
Payment Types Don't Matter 36
Alternative Payments 37
Where to Report Payments 39
What to Do about 1099s 40
What to Do When You Don't Get Paid 42
Losses 42
What's Ahead 46
5. Writing Off T&E Expenses 47
Vehicle Expenses 48
Local Transportation 54
Business Meals and Entertainment 54
Business Travel 57
Business Gifts 59
Strategies for Saving on T&E Costs 60
What's Ahead 60
6. Deducting Office-Related Costs 63
Rental Expenses 63
Home Office Use 66
Materials and Supplies 75
Furniture and Fixtures 76
Computer-Related Costs 80
Insurance 82
Utilities 82
Miscellaneous Office-Related Costs 83
What's Ahead 84
7. Claiming Deductions A to Z 85
Advertising Costs 86
Bad Debts 88
Banking Fees 88
Casualty and Theft Losses 88
Charitable Contributions 89
Dues 91
Education Expenses 92
Impairment-Related Expenses 92
Interest 93
Legal and Professional Fees 94
Licenses and Regulatory Fees 95
Materials and Supplies 95
Moving Expenses 95
Payments for Outsourced Workers 97
Penalties, Fines, and Damages 98
Repayment of Income 99
Startup Costs 99
Subscriptions 100
Supplies 100
Taxes 101
Utilities 101
Checklist of Nondeductible Expenses 102
What's Ahead 102
8. Protecting Yourself with Medical Coverage and Retirement Savings 103
Medical Insurance 104
Health Savings Accounts 109
Tax Deduction for Health Coverage 111
Retirement Savings 112
SEPs 113
Solo 401(k)s 115
Pension Plans 117
IRAs 118
Roth IRAs 119
Strategies for Retirement Savings 120
What's Ahead 121
9. Taking Tax Credits 123
Business-Related Tax Credit 123
Personal Credits Arising from Business 126
What's Ahead 130
Part 3 Strategies for Your Business 131
10. Paying Your Taxes 133
Self-Employment Tax 133
Additional Medicare Tax on Earned Income 136
Additional Medicare Tax on Net Investment Income 137
Estimated Taxes 138
When You Pay Estimated Taxes 138
Sales Taxes 141
What's Ahead 142
11. Strategizing Year-Round for Tax Savings 143
Tax-Savvy Business Decisions 144
Year-End Planning 146
Post-Year Tax Elections 148
Lease Instead of Buy? 150
Don’t Overlook Carryovers 150
Audit-Proof Your Return 151
What's Ahead 153
12. Strategies as Your Business Grows 155
Moving to Larger Quarters 155
Hiring Employees 157
Changing Legal Status 160
Selling the Business 161
Final Thoughts 162
Index 165
