Paying Your Kids
There have been some changes in the law due to the Reconstruction of 1996. YOU can pay any, or all, of your children to work for you. Even a child as young as three can perform duties in a business and be "paid" for them. Older children can perform more traditional office duties.
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Estimated Tax Payments
You no longer have withholding from an employer covering your taxes. You need to allow for that in the rates you charge, and arrange to pay the Federal and State governments.
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DEDUCTIONS
In each category, list everything separately under sub headings to the main heading. If you have any doubt where something fits, list it under OTHER and let your accountant decide, or ask me. Generally list each category that you perceive separately. It's better to have 100 small categories than 1 category called Miscellaneous. The IRS figures that if IBM doesn't need a miscellaneous category - neither does anyone else. They HATE the word miscellaneous! Avoid it!
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RECONSTRUCTING MILEAGE
It's a real pain to write down your odometer reading every time you move your car, isn't it? Well, you don't have to do that. In order to deduct percentage of actual expenses the standard mileage you must have two figures...
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SELF-EMPLOYMENT EXPENSE CATEGORIES
In each category, list everything separately under sub headings to the main heading. If you have any doubt where something fits, list it under OTHER and let your accountant decide, or ask me. Generally list each category that you perceive separately. It's better to have 100 small categories than 1 category called Miscellaneous. The IRS figures that if IBM doesn't need a miscellaneous category - neither does anyone else. They HATE the word miscellaneous! Avoid it!
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FACILITY EXPENSE
Your home and your grounds are your business facility. The entire facility must be repaired and maintained. The amount of those expenses that are deductible is based on the percentage of the building that is office. The office must be used exclusively an on a regular basis as an office. It must also be your principal place of business.
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PAYING YOUR CHILDREN
There have been some changes in the law due to the Reconstruction of 1996. YOU can pay any, or all, of your children to work for you. Even a child as young as three can perform duties in a daycare and be "paid" for them. Older children can perform more traditional office duties.
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TIME SPACE PERCENTAGE
Accurately figuring your Time/Space will save you money! One dollar saved now is worth more than $1 saved next year because of inflation. But you have to have a method. Don't just pick 50% or any other percentage. Why? Because you can't defend your method in an audit. It's arbitrary based on no reasoning. In an audit you have to be able to say, "I did this because of this and after this calculation, the total was this." That's very important! The method you use must be logical, reasonable, obvious, and simple!
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KEEP ALL RECIEPTS
Y'all need to keep ALL receipts for EVERYTHING, including personal expenses like haircuts. Personal receipts should be stuck in a manila envelope somewhere. You don't have to categorize or total them.
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