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

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%)

  • 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

  • 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 Of Entity

  • Sole Proprietorship

  • Limited Liability Company (LLC)

  • S Corporation

  • C Corporation

  • Partnership


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!!!

  • Business purpose

  • Amount spent

    • Receipt, credit card/bank statement, etc

  • Cell phone logs

  • Mileage logs

  • Repair receipts

  • Vehicle registrations


Sample Mileage Log


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


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


Steps To Help You Succeed

  • Quarterly tax planning

  • Making estimated tax payments

  • Set aside money to pay quarterly estimates

  • Retirement accounts

  • Health insurance


Questions?


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

CWilliams@waacpas.com

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

BCarle@waacpas.com

www.waacpas.com

Jeff P. Russell, Esq

Russell Law, PLLC

16 Sunset Avenue

Hampden, ME 04444

ph 207-735-6361

Jeff@Jeffrusselljd.com


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