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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?. 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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  1. Introduction To Self-Employment Presented by: Cullen G. Williams, CPA Brian M. Carle, CPA Jeff P. Russell, Esq.

  2. 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

  3. 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

  4. Choice Of Entity • Sole Proprietorship • Limited Liability Company (LLC) • S Corporation • C Corporation • Partnership

  5. 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

  6. Documentation, Documentation, Documentation!!! • Business purpose • Amount spent • Receipt, credit card/bank statement, etc • Cell phone logs • Mileage logs • Repair receipts • Vehicle registrations

  7. Sample Mileage Log

  8. Separate Business & Personal Items • Separate bank accounts • Business revenues and expenditures in business account • Personal revenues and expenditures in personal account

  9. Tax Implications for Poor Record Keeping

  10. Using Technology To Track Business Finances • Spreadsheets ( Microsoft Excel) – Sample income statement posted on the “Resources” tab of our website • QuickBooks • Apps

  11. Sample Income Statement

  12. Steps To Help You Succeed • Quarterly tax planning • Making estimated tax payments • Set aside money to pay quarterly estimates • Retirement accounts • Health insurance

  13. Questions?

  14. 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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