Self employment and taxes

[slodave]

Yikes, this is not easy. I quit my job at the end of 2006 to go on my own. I made it through the year and tried really hard to keep all of my records straight. I should say, that I am usually terrible with receipts, records, etc., but manage to get by. I use an accountant, but it has been easy in the past to give end of year tax info from previous employers.

This year, I have to go through all my records add everything up, subtract expenses and reimbursements for equipment that I have purchased and so on. I have received all but one 1099 and even though I tried to get my numbers to my accountant, found out I gave him the wrong info. At the moment, I am redoing my numbers so I can get the right info to him. I am missing about $500 worth of invoices for one co. Their 1099 doesn't match my number. Now I get to drive an hour round trip, so I can rifle through their file on me and find the missing invoice/s.

Anyway, just frustrated (at myself) and needed to vent. I haven't started my 2008 tax folder yet . I gotta stop procrastinating. Thanks for reading.

[Hugh R]

Did yah do your quarterly filings on your social security?

[slodave]

Originally Posted by Hugh R

Did yah do your quarterly filings on your social security?

Nope. My accountant suggested that I start a savings account (last year) and put money into it throughout the year. Well, I never really had the $500 to be able to open the account - well, I guess I could've saved up, but did not. Too late now. My dad said don't worry about it until end of year. I think I am going to just make in into the lowest tax bracket, so it shouldn't be that bad - I hope .

I'm a beer drinker, but I feel like buying a 5th of whiskey right now.

Last time I had a business, it was with a partner and he took care of the all things tax related.

[Jims5543]

I let my CPA do it all. He just points to lines, tells me to sign them and I go my happy way.

I have 12 folders in my desk at work, 1 for each month, when my bank statements come in each month I put them in those folders, along with every receipt, and a copy of every check I write and give it to him.

I used to try to keep my own books and gave up. This way at the end of the year he just gives me a list of what he needs from me for my personal return and I get it over to him.

I wish I had done this years ago it has made my life so much easier.

[Hugh R]

Dave, I'm not up on it totally, but you may want to think about that 1/5 of whiskey. The IRS is a very, very stingy pimp that you gotta give your money to. If you owe all your social security from last year, I think they can fine you. Same with income taxes. If you haven't paid in something like 90% of what you owe by the end of the year, they fine you.

[slodave]

I think I should at least start a "business" checking account even though I work out of my house. I have to change my ways to some extent this year. I should really try and open a savings account soon as well.

[island911]

IIRC if it's under $600 (from one gig) a 1099 isn't needed. If you report more than you have in 1099's, I expect that the IRS will be fine with it.

[slodave]

Hugh, I would hope that my CPA would have mentioned something about SS last year, but as far as income, I don't think so. My CPA only suggested putting money away over the year, so if I do owe taxes, I would be covered. My dad (ex tax/bus lawyer), said forget the savings account, you'll probably end up not owing any income anyway. At least I know that I owe on capital gains, fuch!

[island911]

I'll add that it is not unusual for new business to have little or negative net profit for the first couple years. (read: you might expect that your taxes would be low, or even zero.)

[slodave]

Originally Posted by island911

IIRC if it's under $600 (from one gig) a 1099 isn't needed. If you report more than you have in 1099's, I expect that the IRS will be fine with it.

Yup, $600, but only a few companies handed out 1099's to me. I like to be honest (yet screw the IRS where I can - legally) and will still report the income from those that did not. It's only fair. Even when I was employed, I still did a little work on the side and actually forgot to separate some expenses on two returns and actually paid tax on sales tax I already paid and certain expenses that were not taxable.

[GDSOB]

Quickbooks is your friend. Learn it & use it.

I just did my year end books and give it to my CPA on a CD. It makes his job easier and saves me $$$.

[jim72911t]

slodave,

I own a tiny little side business that I run out of my house (it is not my main means of support), and I would strongly recommend getting a business account. I would also suggest getting a business accounting program and learn to use it. I picked up a cheapie program (Simply Accounting) a few years ago and use it for invoicing, customer info, etc. It also runs reports for me at the end of the year, which makes taxes much easier.

Keeping your records separate makes life much easier, and the paper trail will undoubtedly help if you decide to expand and need a SBA loan.

Jim

One more thing: If you have an SBA in your area, sign up with them. They offer free advice, and also offer inexpensive classes in areas such as accounting, etc.

http://www.sba.gov/

[tonypeoni]

Ive been self employed for the past 7 years. Honestly watch your Ps and Qs. Its way too easy to get into serious tax trouble when your a small business. The tax laws are written to shelter big business.

[slodave]

Originally Posted by GDSOB

Quickbooks is your friend. Learn it & use it.

I just did my year end books and give it to my CPA on a CD. It makes his job easier and saves me $$$.

I have been supporting businesses with Quickbooks for a number of years, but never used it for myself.

jim72911t: Quickbooks would be my best bet ^^. Yes, it's time to open another bank account, I agree with keeping expenses separate. Last year proved that my little "business" was viable and I hope to at least double what I did last year.

[Hugh R]

If you actually make an income, write off as much as you can, including phone, portion of rent, portion of utilities, etc. I'm not an accountant or tax guy but have been told don't take the office deduction.

[slodave]

Originally Posted by Hugh R

If you actually make an income, write off as much as you can, including phone, portion of rent, portion of utilities, etc. I'm not an accountant or tax guy but have been told don't take the office deduction.

Yup, I kept all of my business receipts in an envelope last year. I get to write off a little of my car (Toyota) as well. I'll have to ask on rent. In the past, I never have, as I don't have a room dedicated as a "home office". I have computer stuff all over my town home, maybe I can write off half of my rent! Things like DSL, cell phone, electricity (gets a little hard to figure out), computer equipment I need...

[Tobra]

Originally Posted by slodave

I think I should at least start a "business" checking account even though I work out of my house. I have to change my ways to some extent this year. I should really try and open a savings account soon as well.

Dude, checking, credit card, line of credit if you need one, all independant from your personal stuff. I keep one of those week at a glance things in the car and jot down miles and who I went to see, that sort of stuff. Having a car just for business is nice too, depending where you are at with it.

+1 on quickbooks, it saved my life

[Hugh R]

Dave, until I joined Disney, I worked as a consultant and I wrote off books I read and movies that I saw, because I might be involved in a movie based on that book, or I might use some of the technique/ information that I saw in a movie with a studio client. And to tell the truth, I did use some of that info!

[slodave]

I can almost give my info to my CPA! One account I have does not match up with the 1099 they sent, so I have a little detective work to do. I owe SS and some capitol gains, but maybe I'll be even on federal/state income, with my expenses and other deductions. I guess I'm also eligible for the $300.- incentive due in May/June .

Last year was rough, I'm glad that the calendar year is over and that the 07 taxes ordeal is almost over too. I need to put 07 behind me.

Thanks again for taking the time to read/respond.

Tomorrow night I will start getting my Jan/Feb invoices squared away and stop procrastinating the admin part of my bidnezz.

Dave

[Tobra]

Quickbooks, start your data entry for 2008 and stay current. Next January you will be laughing your ass off