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J.K. Lasser's Guide to Self-Employment: Taxes, Tips, and Money-Saving Strategies for Schedule C Filers

ISBN: 978-1-118-81242-6
192 pages
October 2013
J.K. Lasser

Description

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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Table of Contents

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

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Author Information

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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