Although the simplicity and affordability of running a business as a sole proprietorship may have attractive perks, there are reasons why you might benefit from forming an LLC (limited liability company) or corporation instead.
How can you recognize that a change may be in order? Continue reading
People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
Different types of businesses need different types of licenses. It can get pretty complicated, so Washington State has created an online tool that will help you create a personalized Business Licensing Guide based on your answers to a few questions.
To give it a try, click here…
Then leave a comment to let us know what you think.
Going from “employee” to being your own boss brings some significant changes professionally and personally. One of the most significant to become accustomed to is no longer having certain taxes neatly taken from your paycheck from your employer.
As a self-employed individual, not only are you responsible for directly submitting the income tax you owe to the federal, state, and local governments, you’re also responsible for paying self-employment tax.
According to IRS.gov, “Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.” Continue reading
Except in a few cases, the law does not require any specific kind of records. However, you may want to include all of these items, no matter what process of recordkeeping is chosen:
- Business checkbook
- Daily summary of cash receipts
- Monthly summary of cash receipts
- Check disbursements journal
- Depreciation worksheet
- Employee compensation record
- Any financial statements
Also, be diligent in keeping these records as well, whether it be the original source documents OR electronic copies:
- Gross receipts
- Travel, transportation, entertainment & gift expenses
- Employment taxes
- Cancelled checks