Introduction to self employment
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Introduction To Self-Employment. Presented by: Cullen G. Williams, CPA Brian M. Carle, CPA Jeff P. Russell, Esq. What is Self-Employment?. Employee VS . Independent Contractor. Receive wages reported on a W-2 Responsible for ½ FICA taxes (7.65%)

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Introduction To Self-Employment

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Introduction to self employment

Introduction To Self-Employment

Presented by:

Cullen G. Williams, CPA

Brian M. Carle, CPA

Jeff P. Russell, Esq.


What is self employment

What is Self-Employment?

Employee VS

Independent Contractor

  • Receive wages reported on a W-2

  • Responsible for ½ FICA taxes (7.65%)

  • Taxes withheld from paycheck

  • Responsible to employer

  • Uses employer’s tools & resources

  • Receive payments reported on a 1099-MISC

  • Responsible for 100% of FICA taxes (15.3%)

  • No taxes withheld

  • Responsible to self

  • Uses own tools & resources


Business vs hobby

Business Vs. Hobby

  • 1099-MISC received does not always mean you have a business

  • Profit motive

  • Level of personal enjoyment

  • Examples

    • Mary Kay

    • Making furniture

    • Drag racing


Choice o f entity

Choice Of Entity

  • Sole Proprietorship

  • Limited Liability Company (LLC)

  • S Corporation

  • C Corporation

  • Partnership


Business deductions

Business Deductions

Ordinary & Necessary

Allocation of Personal Use

  • Examples could include, but are not limited to:

    • Cost of product sold

    • Insurances specific to the business

    • Legal fees for establishing business

    • Accounting fees for bookkeeping, planning, and tax preparation

    • Certain office supplies

    • Certain travel

  • Examples of personal use items typically include, but are not limited to:

    • Automobiles

    • Cell phones

    • Computer & internet

    • Meals


Documentation documentation documentation

Documentation, Documentation, Documentation!!!

  • Business purpose

  • Amount spent

    • Receipt, credit card/bank statement, etc

  • Cell phone logs

  • Mileage logs

  • Repair receipts

  • Vehicle registrations


Sample mileage log

Sample Mileage Log


Separate business personal items

Separate Business & Personal Items

  • Separate bank accounts

    • Business revenues and expenditures in business account

    • Personal revenues and expenditures in personal account


Tax implications for poor record keeping

Tax Implications for Poor Record Keeping


Using technology to track business finances

Using Technology To Track Business Finances

  • Spreadsheets ( Microsoft Excel) – Sample income statement posted on the “Resources” tab of our website

  • QuickBooks

  • Apps


Sample income statement

Sample Income Statement


Steps to help you succeed

Steps To Help You Succeed

  • Quarterly tax planning

  • Making estimated tax payments

  • Set aside money to pay quarterly estimates

  • Retirement accounts

  • Health insurance


Questions

Questions?


Contact us

Contact Us

Cullen G. Williams, CPA

Williams & Associates, P.A.

11 Debeck Drive

Holden, ME 04429

ph 207-941-9810 EXT 17

f 207-941-9432

[email protected]

www.waacpas.com

Brian M. Carle, CPA

Williams & Associates, P.A.

11 Debeck Drive

Holden, ME 04429

ph 207-941-9810 EXT 16

f 207-941-9432

[email protected]

www.waacpas.com

Jeff P. Russell, Esq

Russell Law, PLLC

16 Sunset Avenue

Hampden, ME 04444

ph 207-735-6361

[email protected]


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