5 Tax Tips for Self-Employed Individuals in Any Field

Self-employment is like ice cream; it comes in a large variety of flavors. You can be a freelance writer, a graphic designer, a landscaper or a dog walker. Some people are self-employed full time, while others work part-time around their “day job”. Whatever your flavor of self-employment is, there are some definite tax tips you need to know.

If You Earn It, You Have to Declare It

If you do work for businesses, they will generally send you a 1099 form that you have to file at the end of the year. However, even if you work for individuals, or a business that does not send you a 1099 form, you still have to declare that income. Do not be fooled by thinking, “If I make less than $600 from one person (or business) during the year then I don’t have to declare it.” That is an often-misunderstood concept. The IRS expects you to declare every penny you earn.

Track Your Income and Expenses

You do not want to hand your accountant envelopes full of unsorted receipts and cashed checks come tax season. The accountant may miss some deductions because he or she could not find the right slip of paper. Even relatively inexpensive programs like Quicken work great. Keep track of all your hard copy paperwork and keep it organized as well. The IRS has very specific rules about business tax deductions and whoever does your tax return will need as clear a picture as possible to maximize your deductions.

Estimate Your Taxes

There are two ways to avoid being hit with a whopping tax debt at the end of the year. Either you have to be frugal enough to put away a certain percentage of every payment you receive, or you have to arrange with the IRS to pay quarterly estimated tax throughout the year. Most people choose the latter in order to avoid yearly penalties for underpayment. It may be tempting to spend all your money as quick as you earn it, but remember that just because no one took taxes out when you earned it, that does not mean you will not have to pay later. Estimating and paying your taxes is one way of avoiding having to file a tax extension form in the future.

Pick Your Name

If you are doing business under your own name, that is great. You just file a Schedule C form with the IRS and life is simple. However, if you are doing business under a company name, then you should have some sort of business license in order to avoid problems with the IRS. It can be a simple DBA (doing business as) license, but you want to make sure that you have all your legal paperwork in order before filing your taxes.

Self-Employment Tax

The IRS does charge a special tax rate for people who are self-employed. You will have to pay the self-employment tax, but you can deduct half of when figuring out your adjusted gross income. Form 1040 Schedule SE, available on the IRS website, will help you figure out exactly how much your self-employment tax will be.

Filing a tax return when you are self-employed is trickier than filing a regular tax return. Many people find that going to a professional tax accountant is well worth the initial fees in order to get the highest possible return they can. Unless you are very knowledgeable about business tax laws, you should keep yourself as organized as possible and seek the help of a reputable professional when it comes time to file your taxes.

About the Author: Annita Grosh is an accountant who specializes in working with self-employed invididuals. She loves watching as an idea becomes a workable and profitable business.

Five Money Saving Methods of Working From Home

Finding new ways to save money is never easy, but working from home can make it easier to build up that savings account. It is necessary to spend money to have even a slight chance of making money and this is even true when it comes to getting a regular job. A regular job will cost much more than working from home through a few basic measures.

Reduced Transportation Cost:

Going to a regular job requires driving, taking a bus, riding a train or taking a subway. Regardless of the mode of transportation, most jobs away from home will require spending some money to reach the office space.

Working from home has a key benefit in saving cash via transportation. It is not necessary to spend a single penny getting from one room to the other. That benefit of reduced transportation can add up quickly by the end of the year.

Depending on the distance to the office and the mode of transportation, it can save as much as $100 or more per month in transportation costs. Even jobs close by that take 5 minutes to drive to, will cost you roughly $30 or more per month.

Lower Food Costs:

Going to a regular job opens a number of doors to the temptation to spend. While it is possible to pack a lunch and avoid coffee, it is always tempting to buy lunch at least once or twice a week. In some cases, running out the door might require buying lunch rather than packing lunch.

Staying at home has the benefit of saving on the cost of buying food outside. Not only it is less costly to make a meal and a pot of coffee at home, it is also much healthier than most restaurants and cafeterias available around a regular job.

Lower Clothing Costs:

Working at home offers the benefit of wearing comfortable clothes and avoiding expensive suits or work attire. Since the job will not entail face to face conversations with clients, going out to an office or making an impression with the outfit, the expense of clothing becomes much less.

The uniform of choice for working in the home is anything that feels comfortable and does not reduce motivation. That can range from casual outfits to semi-nice clothes, based on personal preferences.

It is not necessary to hide away from the world, but the freedom of wardrobe choice while working at home is a key reduction in necessary expenditures.

Tax Deductions:

As an individual who works from home, tax benefits are available. Self-employed individuals can cut taxes by making use of deductions. The home office space, gas used while working, any equipment necessary to perform job tasks, office supplies and even utilities will all provide a discount.

It is not possible to claim tax deductions on your return when working at a regular w2 job that relate to home expenses such as mortgage interest. Only those who work at home can add the expense of personal computers and a percentage of utilities to the tax deductions.

Making More Money:

Working from home wastes much less time. Even a half hour commute to work will result in five hours or more per week in just transportation. Working from home clears up those five hours so that more time is spent making money.

Working from home has clear benefits when it comes to saving more cash. Instead of wasting a few hundred dollars in transportation, clothing and other expenses necessary to work in a regular job, it is possible to save that cash by working at home. Saving money at home starts with determining the cost of going to a regular job.

Jeff is an Internet marketing consultant and content distributor for NY divorce lawyers, and He is also a passionate blogger who often writes about money saving, sharing his knowledge and experience in that field.