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Show Me The Money

Show Me The Money. Shannon Nash, Esq., CPA The Nash Chronicles http://thenashchronicles.wordpress.com. Highlights. Blogging As A Business Types of Business Tax Records (1099) and Bookkeeping Popular Deductions Audit Issues Taxes: what and when you have to pay. A Business Is….

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Show Me The Money

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  1. Show Me The Money Shannon Nash, Esq., CPA The Nash Chronicles http://thenashchronicles.wordpress.com Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  2. Highlights • Blogging As A Business • Types of Business • Tax Records (1099) and Bookkeeping • Popular Deductions • Audit Issues • Taxes: what and when you have to pay Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  3. A Business Is…. • Anything you do with a Profit Motive • DBA and 1099s = Business Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  4. A Hobby Is…. • Hobby = an activity just for the fun of it with no profit motive. • Typically no DBAs or 1099s Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  5. Report all of the income but may not be able to take all of your hobby related deductions. Hobby Losses are treated as miscellaneous itemized deductions (i.e., which must be greater than 2% of your adjusted gross income before they are deductible). If Hobby Losses > hobby gain = no extra deduction Hobby Gain always has to be reported as income, regardless of the amount of hobby losses. Report all income and all deductions Business losses are fully deductible on Schedule C If Business Losses > Business income = extra deduction against W-2 income The net business gain or loss is what gets reported. Hobby vs Business Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  6. Types • DBA (Doing Business As) • Sole Proprietorship • LLC (Limited Liability Company) • S Corporation Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  7. As a “Business Owner” you Must… Generate your own income Fund your expenses Track and report income and expenses Contribute to Social Security and Medicare Pay income taxes on your profit Pay taxes at least 4 times per year Track and report any payments to contractors Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367

  8. Form 1099 • You will get this form if you receive $600 or more for your services. • Include the amount listed on Form 1099 as compensation on your Schedule C, Profit or Loss from Business (Form 1040). • DO NOT attach Form 1099 to your tax return. Instead, just keep a copy of this form for your records. Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  9. Schedule C • Report all of your business income • Report business losses • Net profit or loss is the included on the front on your 1040 Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  10. Key “Deductions” Depreciation Home office deduction (form 8829) < $250,000 on equipment? Write it off Phone & Internet Come up with a Business Percentage. Can’t take personal use. Household expenses (rent, insurance, Utilities, etc) % of square footage for office X Meals & Entertainment Only 50% deductible Mileage $.55 per mile Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367

  11. Other Deductions Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  12. Avoiding An Audit - Rule of Thumb • The self-employed and those earning over $100,000 annually are especially at risk for an audit. • Do your best not to attract unwanted attention. If you don't wish to call attention to your tax return, don't do anything to raise a red flag. • Be honest. When it comes to the IRS, honesty is truly the best policy. Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  13. Avoiding An Audit - Math is Key • Double and triple check your math. • Many are chosen for audits because of errors on tax forms. Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  14. Avoiding An Audit - The Matching Rule • Report all income, even if it's cash or tips • Especially all monies reported on W-2s and 1099s. • The IRS “matches” these forms with the numbers that you put on your tax return. Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  15. Avoiding An Audit - Inflation • Be fair with your deductions. • Over-inflating numbers is almost the same as calling up the IRS and saying, "Audit me!" Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  16. Avoiding An Audit - 3 out of 5 Year Rule • If your business can’t show a profit in three-out-of-five years, the IRS will typically presume that you are not operating a business, but you are running a hobby. • Presumption can be overcome with good records and proof of business motive 3 5 out of Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  17. Avoiding An Audit - Time to Incorporate? • The self-employed and those earning over $100,000 annually are especially at risk for an audit. • Many of these people are sole proprietorships filing a Schedule C. • The risk of an audit for corporations, partnerships and limited liability companies (with multiple owners) are significantly lower. Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  18. Documents to Keep • W-2s • 1099s • Bank statements • Credit card statements/year-end summaries • House related statements/expenses • Receipts for business expenses or related to improvements on your home • Mileage logs/records • Receipts for meals and entertainment Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  19. What Taxes to Pay and When Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367

  20. Resources Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367

  21. Shannon Nash Contact Info • Twitter-http://twitter.com/shannonnash • Linkedin - http://www.linkedin.com/pub/shannon-nash-esq-cpa/0/a97/7b1 • Facebook- http://www.facebook.com/pages/Tax-Diva/309254607988 • Blog - http://thenashchronicles.wordpress.com • Myspace - http://www.myspace.com/shannonnash • Media Page-http://www.nashgroup-usa.com Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

  22. Q & A Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

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