[eBook Code] J.K. Lasser's Guide to Self-Employment (eBook Code, 2nd)

Preface 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 9

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 14

Tax ID Number 14

Tax Year 17

Accounting Method 17

Decide Your Business Name 20

What’s Your IP? 21

Obtain Licenses, Permits, and Permission 23

What’s Ahead 24

3. Using Schedule C 25

Tax Filing on Schedule C 25

When, Where, and How to File 30

What’s Ahead 31

Part 2 Reporting Income and Expenses 33

4. Reporting Your Income 35

Payment Types Don’t Matter 36

Alternative Payments 38

Where to Report Payments 39

What to Do about 1099s 40

What to Do When You Don’t Get Paid 42

Losses 43

What’s Ahead 46

5. Writing Off Vehicle, Travel, Meals, and Gifts Expenses 49

Vehicle Expenses 50

Local Transportation 56

Business Meals 56

Business Travel 59

Business Gifts 61

Strategies for Saving on Travel Costs 61

What’s Ahead 62

6. Deducting Office-Related Costs 65

Rental Expenses 65

Home Office Use 68

Materials and Supplies 79

Furniture and Fixtures 80

Computer-Related Costs 84

Insurance 86

Utilities 86

Miscellaneous Office-Related Costs 87

What’s Ahead 88

7. Claiming Deductions A to Z 89

Advertising Costs 90

Bad Debts 91

Banking Fees 92

Casualty and Theft Losses 92

Charitable Contributions 93

Dues 95

Education Expenses 96

Impairment-Related Expenses 96

Interest 97

Legal and Professional Fees 98

Licenses and Regulatory Fees 99

Materials and Supplies 99

Moving Expenses 99

Payments for Outsourced Workers 100

Penalties, Fines, and Damages 101

Repayment of Income 102

Startup Costs 102

Subscriptions 103

Supplies 103

Taxes 103

Utilities 104

Checklist of Nondeductible Expenses 104

What’s Ahead 105

8. Protecting Yourself with Medical Coverage and Retirement Savings 107

Medical Insurance 108

Health Savings Accounts 111

Tax Deduction for Health Coverage 113

Retirement Savings 114

SEPs 116

Solo 401(k)s 118

Pension Plans 121

IRAs 121

Roth IRAs 122

Strategies for Retirement Savings 123

What’s Ahead 124

9. Taking Tax Credits 127

Business-Related Tax Credit 127

Personal Credits Arising from Business 130

What’s Ahead 134

10. Claiming Your Tax Bonus 137

General Rules 137

Limitations 138

Specified Service Trades or Businesses 139

What’s Ahead 140

Part 3 Strategies for Your Business 141

11. Paying Your Taxes 143

Self-Employment Tax 143

Additional Medicare Tax on Earned Income 146

Additional Medicare Tax on Net Investment Income 147

Estimated Taxes 148

Sales Taxes 152

What’s Ahead 153

12. Strategizing Year-Round for Tax Savings 155

Tax-Savvy Business Decisions 156

Year-End Planning 158

Post-Year Tax Elections 160

Lease Instead of Buy? 161

Don’t Overlook Carryovers 162

Audit-Proof Your Return 163

What’s Ahead 165

13. Strategies for How to Grow 167

Getting Certified 167

Getting a Mentor 168

Outsourcing 169

Using Technology 170

Continuing to Learn 170

What’s Ahead 171

14. Strategies as Your Business Grows 173

Moving to Larger Quarters 173

Hiring Employees 175

Changing Legal Status 178

Selling the Business 180

Final Thoughts 181

Index 182