Lawn Care Business Forum Lawn Care Business Book Lawn Care Business Blog Lawn Care Software
Home Forum Contract & Flyer Templates Blog Software Videos Podcast Calculators / Estimators Store Mower Review Design It Yourself Lawn Business School

Go Back   GopherHaul Landscaping & Lawn Care Business Marketing Forum > Business > General Business Discussions

General Business Discussions A place to talk about general business discussions.

7 Tax Tips for the Self Employed


General Business Discussions

A place to talk about general business discussions.
Reply
 
Thread Tools Search this Thread
  #1  
Old 03-09-2009, 08:52 PM
VPS Lawn Care
Guest
 
Posts: n/a
Default 7 Tax Tips for the Self Employed

7 Tax Tips for the Self Employed
Posted on: Mar 3, 2009 Share with friend

Posted by: SBOCTeam
Being self-employed is a dream for many people. Who doesn't want to be his or her own boss? Of course, the downside of being the boss is the all responsibilities that come with the job. Unfortunately, calculating and paying taxes are part of those responsibilities.

By Christopher Freeburn
According to the Internal Revenue Service (IRS), you are considered self-employed "if you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor." The IRS requires self-employed individuals to pay a Self-Employment Tax, which assesses Social Security and Medicare taxes similar to those paid by employees and their firms. The IRS also requires self-employed people to pay estimated taxes as a substitute for the withholding taxes that are applied against employed person's salaries. These factors make complying with self-employment taxes rules somewhat more complicated than the rules that apply to the employed.

With that in mind, here are some tax tips for the self-employed:

1. Consult a CPA. Even if you are intent on doing everything yourself, it is better to seek outside help than make a mistake when preparing your taxes. An error on your tax returns can result in escalating fines and penalties from the IRS. Tax law is complicated, particularly when it comes to self-employment. To be certain you are in compliance with all relevant requirements, talk to a certified public accountant and review your situation. A CPA will be familiar with the federal, state and local tax laws that apply to you. Additionally, a CPA may be able to point out tax liabilities and deductions that you hadn't considered.

2. Keep good records. Good record keeping is more than simply a good business practice; it is a necessity when it comes to dealing with the IRS, which may demand to see every last detail of your income and expenses, particularly when you claim deductions on your tax return. If you are ever audited-and being self-employed makes that more likely-you will need to have every receipt and document to support your claims. Otherwise, fines and penalties will accrue. Get in the habit of saving everything, and develop a filing system that allows you to retrieve needed documents quickly.

3. Deduct the cost of medical insurance. Self-employed people can deduct up to 100% of medical insurance premiums paid for medical insurance for themselves, spouses, or dependents. Medical insurance costs are deducted directly from total income.

4. Deduct all business expenses. Every drop of toner you buy for your printers, reams of paper, shipping expenses, postage, software, pens and pads, and anything else you use for your business is an expense that can be deducted. Be sure to save every receipt to back up your claimed deduction. Also be sure that you can justify the claim that the items or services purchased were used directly for your business.

5. Increase expenses to lower taxable income. As the end of the year approaches, you can increase you deductions against this year's income by making business purchases now. Need another printer, or PC? Better desk or cushy new office chair? Buying it before the end of the year means whatever you spend can be deducted against this year's income taxes.

6. Contribute to your retirement. The options for self-employed people to save for retirement have never been better. If you haven't created a retirement plan for yourself, now is a good time. Payments made to a retirement plan-401(k), IRA, KEOGH, or SEP plan-are deductible against the current year's income. Note that most retirement plans have a contribution limit. Most local banks or financial institutions will be able to help create and maintain your preferred retirement vehicle.

7. Consider the home office deduction. Do you conduct business out of any part of your home? Many small business owners have at least one room devoted to some aspect of their business, whether it is keeping shipping materials in the garage, or maintaining a bedroom that has been converted into an office or filing storage space. With so many small businesses operating partially or completely out of people's homes, the IRS allows small business owners to deduct a portion of rent, mortgage payments, utilities and maintenance for qualifying home offices. The IRS has fairly stringent tests for such deductions, however, and it is advisable to consult a CPA about your particular situation to make certain it qualifies.
Reply With Quote

Stop guess-timating. Learn how to estimate and make money! $$$
Mow Time Estimator Lawn Care Price Estimator Mulch and Topsoil Calculator Snow Plow Estimate Calculator


  #2  
Old 03-09-2009, 10:26 PM
Steve's Avatar
Steve Steve is online now
Administrator
 
Join Date: May 2003
Posts: 37,807
Rep Power: 10
Steve has disabled reputation
Default

Lawn care business tipsLawn Care Business Book
Quote:
Deduct the cost of medical insurance. Self-employed people can deduct up to 100% of medical insurance
This is very interesting!


Quote:
5. Increase expenses to lower taxable income. As the end of the year approaches, you can increase you deductions against this year's income by making business purchases now. Need another printer, or PC?
This is another interesting topic. I think there are two schools of thought on this. One side is you should keep as much as you can and the other is increase expenses.

What's your view on it?
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote
  #3  
Old 03-10-2009, 12:12 AM
musician/lawnman musician/lawnman is offline
Chuck
 
Join Date: Feb 2008
Location: South West Florida
Posts: 919
Rep Power: 0
musician/lawnman is on a distinguished road
Default

Hey Steve,
It should be noted that by medical expenses.... that means EVERYTHING.
Insurance premiums, Co-pays for dr. visits, Deductibles, prescriptions, even OTC. drugs, band-aids etc. can often be claimed.

I am going to do my taxes in the morning. I have just under $11,000.00 in medical expenses for my young, healthy family of 4 people. It adds up & you don't want to be paying income taxes on an amount like that if you don't need to.

As far as your question....
I think there's a balance. You shouldn't go blow $15,000 in december fo the hell of it. But if you forsee expenses & purchases you are going to need to make .... why not make them before the end of the year.

I have a friend who's wife is in business for herself. By listening to her you might think that if it's a write off, it was FREE! I've tried to explain but it's like talking to a wall. If you land in say a 28% tax bracket then roughly, you pay 28% of your income to taxes. If you buy a $100 desk & write it off then you don't pay taxes on that $100. It saved you $28. The desk still cost you $72. It's not free. It's better to think of it like a discount on things you buy for your business. The "oh, I'll just write it off" additude can get expensive.
Reply With Quote
  #4  
Old 03-10-2009, 11:47 PM
Steve's Avatar
Steve Steve is online now
Administrator
 
Join Date: May 2003
Posts: 37,807
Rep Power: 10
Steve has disabled reputation
Default

Quote:
It's not free. It's better to think of it like a discount on things you buy for your business. The "oh, I'll just write it off" additude can get expensive.
Very good point. I think all too often the concept of a tax write off gets us to think it is free but it's not. The more we see that, the more we can get a better grasp of what we are doing.
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote
Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
turning tips for a 36" FourSeasons Community Assistance 3 02-16-2009 04:40 PM
Tips? Steve General Business Discussions 0 12-22-2007 01:20 PM
Tips for Getting PR for Your New Business Steve General Business Discussions 0 06-09-2006 04:19 PM
Blog tips Steve Search Engine Optimization and Website Design Discussions. 3 05-10-2006 08:42 PM
Tips for Your Website ritchiem Search Engine Optimization and Website Design Discussions. 0 01-13-2006 11:00 AM

» Recent Threads
  RatingTitle, Username, & Date Last Post Replies Views
Lawn Care Book Ranked #1
Steve
Today 12:36 AM
Today 12:36 AM
by Steve
0 10
hello all
romanlandscape
01-29-2016 03:46 PM
Today 12:27 AM
by Steve
5 121
back surgery
Bradcook21
01-28-2016 08:51 PM
Today 12:25 AM
by Steve
10 200
Hi
Sellers Lawn Care
02-02-2016 01:48 PM
Yesterday 08:03 AM
by Sellers Lawn Care
4 94
Collecting payments from...
Niagara Mowing
02-03-2016 05:21 PM
Yesterday 08:00 AM
by Niagara Mowing
7 142
SMS assist? The good,...
jcurr33
01-27-2016 10:24 PM
02-04-2016 11:53 PM
by Steve
5 174
I need some help...
Anise
02-04-2016 01:39 PM
02-04-2016 11:51 PM
by Steve
3 70
Customers dodging the...
Rocky
11-06-2015 06:22 AM
02-04-2016 03:41 AM
by C&DPropertyManagement
7 1,425
Offering a "Trial"...
wybut076
02-01-2016 06:27 PM
02-03-2016 08:26 PM
by Just for Cuts
7 171
Iowa Caucus Predictions?
Steve
02-01-2016 06:31 PM
02-03-2016 12:40 AM
by Steve
1 54
Laying White River Rock
DiamondLawnCare
02-01-2016 08:27 PM
02-03-2016 12:17 AM
by Steve
1 65
Networking for a...
jcurr33
01-30-2016 09:26 PM
02-01-2016 06:27 PM
by Steve
4 138
Customer giving a 1099?
apmAkron
01-27-2016 07:22 PM
01-31-2016 08:55 PM
by Chilehead
6 193
happy to be here
redrobin
01-29-2016 10:45 AM
01-31-2016 08:44 PM
by Steve
1 89
Thought's on an "E-Z...
jcurr33
01-27-2016 10:48 PM
01-31-2016 08:38 PM
by Steve
4 165
Changes
Knaubone
01-30-2016 10:56 PM
01-31-2016 08:31 PM
by Steve
1 79
Thoughts on this Exmark...
googus
01-28-2016 04:24 PM
01-28-2016 08:09 PM
by Chilehead
1 106
1st year in
jcurr33
10-18-2015 05:07 PM
01-28-2016 07:49 PM
by Chilehead
6 4,085
Need opinion on zero...
Mr. Mow
01-24-2016 05:42 PM
01-28-2016 07:41 PM
by Chilehead
10 293
Opinion on liquid vs...
Bradcook21
01-25-2016 02:03 PM
01-28-2016 07:38 PM
by Chilehead
9 251
Finding property size
Gageslawncare
01-25-2016 11:08 AM
01-28-2016 12:05 PM
by Gageslawncare
10 251
Tiger TG 2661 Commercial...
lawnman1959
01-25-2016 08:12 PM
01-27-2016 07:57 PM
by Just for Cuts
5 190
Spouse as a dependent?
Steve
01-26-2016 01:51 AM
01-27-2016 10:44 AM
by Chilehead
3 159
Hello All
C&DPropertyManagement
01-23-2016 12:21 PM
01-26-2016 01:24 AM
by Steve
1 141
Credit Cards - What's in...
Shark1611
06-16-2015 04:04 PM
01-23-2016 03:43 PM
by C&DPropertyManagement
17 7,607
Start My Own Business?
mowandblow1980
01-12-2016 08:43 PM
01-19-2016 07:00 PM
by Steve
12 560
State of the nation 2016.
Steve
01-12-2016 12:05 AM
01-19-2016 06:57 PM
by Steve
6 330
little help? first big...
Brian3137
12-31-2015 12:39 PM
01-19-2016 06:54 PM
by Steve
23 1,001
Hi everybody...
Greg_TopYardServices
01-14-2016 08:10 AM
01-19-2016 02:47 PM
by SC93
12 401
What's your next...
Steve
05-15-2015 12:54 PM
01-17-2016 08:48 PM
by Homeland unlimited
25 7,862
Plow controller problems
scaypa
01-12-2016 05:49 PM
01-16-2016 10:46 AM
by scaypa
4 251
Say Hello !!!
Steve
03-19-2007 12:18 PM
01-15-2016 07:23 PM
by tannerduncan
1,244 427,821
Pricing issue
Mr. Mow
07-07-2015 07:15 AM
01-15-2016 11:20 AM
by djlandscaping06
23 5,344
New College Course
Dr. D
01-14-2016 01:45 PM
01-14-2016 05:35 PM
by Steve
1 178
Yelp
Shark1611
01-13-2016 10:00 AM
01-14-2016 05:32 PM
by Steve
4 237
New to the forum from...
Doug Green
01-12-2016 12:23 PM
01-14-2016 08:34 AM
by Doug Green
2 212
Facebook advertising
Just for Cuts
12-13-2015 08:49 AM
01-13-2016 10:20 PM
by Just for Cuts
12 859
Choosing local business
Doug Green
01-12-2016 12:29 PM
01-13-2016 06:12 PM
by Steve
2 371
4 Seasons Landscaping LLC
Doug Green
01-12-2016 12:56 PM
01-12-2016 12:59 PM
by Doug Green
1 235
2016 business goals
OxfordOS
01-09-2016 04:19 PM
01-12-2016 08:36 AM
by mowandblow1980
15 512
Hi to you NOTHERNERS
stevef1201
11-11-2014 05:56 PM
01-08-2016 09:30 PM
by jeramicox76
10 2,738
Amazon services
thom
12-22-2015 08:40 AM
01-07-2016 11:53 AM
by Steve
17 822
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 03:32 AM.


(C) 2011 Riggs Publications - Terms of use & Privacy Policy

All times are GMT -5. The time now is 03:32 AM.

(C) 2011 Riggs Publications - Terms of use & Privacy Policy