Tax question

We file a schedule F and the depreciation forms.

We have never had to do the SE forms though.

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We don't have any dependents, all our kids are grown.

Are depreciation forms just for big equipment?

We use a local CPA and in an uncomplicated year (meaning you don't have real estate or stock transactions) she charges between $175 and $300. Worth every penny. I want NOTHING to do with the KGB I mean IRS. Last year due to moving and starting my business back from scratch and doing lots of grandbaby care, we had way less income than your sales, but I wouldn't try to do the tax forms on my own.[Which is, of course, yet another tax]. Back before we moved we had more income from the business and paid a larger CPA firm WAY too much . Even so, I have peace of mind about it.

The vehicle log suggestion from 65284 is exactly right and is very easy to do, and should naturally match up with your appointment book/calendar or whatever system you have for notating when you do what you do with your business. I use a notebook and total mileage at the bottom of each page (keeps the January tax preps from being too annoying), noting the date, mileage start and finish and client name(s) for each trip. Same thing for all the money that comes in. The deposit log follows right along with the appointment calendar and mileage log, all backed up by receipts, check register and bank statements. Having all of them helps to track down information when questions arise.

Thanks! We are definitely putting notebooks in the trucks for mileage. I have a friend who is a CPA and I may see if she wants to swap for the tax work. We supply them meat already.

I do think it really stinks that taxes have to be so difficult!

If a good CPA isn't in the budget how much of your budget will cover an audit or an error? Go to the library and start your research on business and book keeping. Running a business is not the actual performing the service or making the product, it is a job unto itself.

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
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some of the best advice I could offer... talk to a CPA and ask them what you need to do. getting behind on taxes is not fun and its ALOT of stress.
keep ALL your receipts. once you start you own "business" you can deduct just about anything you buy... except personal stuff...

good luck!!!!

Obviously free internet advise is wirth what you pay for it, including mine.

You can deduct up to 75% of a vehicles cost failrly easily as a standard deduction. If you want to deduct more, you better keep the logbook.

If you go it alone, brush up on the schedule F and the deduction forms now, so you can plan during the year how they will help you. Do not wait until next January to start looking into these things.

Cash register reciepts & cancelled checks are important pieces of paper.

You say you have most of your stuff bought & paid for already.

Then - you kinda goofed already. You should have the bigger items on a depreciation schedule already - major costs directly associated with your business should be depreciated, and day-to-day costs should be deducted for the year. If you are baking, your kitchen is a major expense, and should be on the forms as a cost of doing business.

It is hard to jump from filing W-2s, to doing all this yourself. One certainly can, but there is a lot of education.

Using the CPA for a year or 2 will get you headed in the right direction, and alert you to how the tax game is played. Without that as a starting point, you really have to educate yourself. My CPA probably runs the numbers through the same type of computer program I could & you could. His value is in how he asigns different parts of the business to deductions, and planning out purchases in the coming year.

The issue with being self employed is social security taxes - you pay an additional 7+ cents for every dollar you make when you are self employed. On your tight budget, that is real money, losing 7% more of your income. Some deductions will avoid SS taxes; others will not. This SS stuff is a real deal.

Now, we have the health insurance deal coming.... Oh boy, this is going to kick in 1099 forms for any transaction over $600 (I believe). They have gone totally 1099 bonkers, you will need dozens of those forms. Didn't used to be so many, but sounds like, now it will be. Crazy. Spend or recieve any money, and you need to do a 1099 at the end of the year. Again, doesn't affect those with W-2s so much, but those of use self-employed, oh boy.

--->Paul

I wonder how that gets viewed. It's possible the IRS would view that as a business, not farming, and you would need a schedule C instead of schedule F, with quarterly filing with the schedule C.

I donno?

--->Paul

Yeah that is what I am wondering. I also wonder since we will be bringing in so little if we shouldn't just claim whatever we make and not worry about the other stuff. I should think $16,000 is well below taxable level.

bad idea. you will still have to pay self employment tax (social insecurity). start thinking like a business owner and not a clock puncher. deduct everything you possibly can. if the business used it then keep track of it as an expense. the kgb likes to see things a certain way and a farm or small business without expenses sends up red flags. when you start digging into the tax forms, instructions and rules you will amazed at what you can deduct. even if you use a cpa educate yourself about the taxes. you don't want to pay for someone elses "good" dead.

Ok thanks, good to know.

You would get a real education on this next February!!!!! What, about $2000 SS tax on that deal, and you would have some state & fedral income tax as well. You need to be under $8000 before you can start to slip under the radar, and even then SS will pick up a lot of things. (These are wild guess numbers, depends on a lot of different situations......)

Bad idea, as mentioned.

Think like a business person, not a W-2 employee. The govt is going to take what they think is theirs. You want to prevent that by legal means allowable under law.

Shoulda been planning this out a year ago, you are behind the ball already. You need to catch up. If you want to live on $16,000 gross, you can't afford $4000 tax bills at the end of the year....

--->Paul

My house only just burnt down in February so we weren't exactly planning to do this last year.

Don't forget, barter income is taxable for your business. If your CPA friend doesn't tell you that, find another CPA.

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