One of the real life stories from Smart Business Stupid Business is about a client of mine who went from employee to business owner and discovered $10,000.
Before he lost his job, he was making $50,000 per year as a middle manager. His credit cards were maxed out and he worried everyday driving to work because his tires were shot. If he lost a tire, he’d have no way to buy another.
Then the worst thing happened, he lost his job.
That’s happened to a lot of people these days, so nothing new there. The fortunate thing for him was that he found a position within a month. Only he was going to be an independent contractor, not an employee. He made the same amount of gross income, but he was now responsible for paying his own taxes and medical insurance.
But somehow, at the end of the year, after his taxes were all figured out, he had an extra $10,000 in cash.
That’s because a lot of the expenses that he would normally have anyway like his car, home office, computer, cell phone, travel and the like became at least partially deductible.
He went from “Earn-Tax-Spend” to “Earn-Spend-Tax” resulting in less tax and more money.
If you don’t have a business yet, start one today! If you have a business, ask yourself: Are you getting all the benefits you should?
We’re covering How to Discover Your Hidden Business Deductions in the USTaxAid Coaching course tonight. Join us!
Remember that coaching is free when you become a client of USTaxAid Services.
Tags: Coaching • diane kennedy • Diane Kennedy CPA • earn-spend-tax • earn-tax-spend • independent contractor • ustaxaid • UStaxaid.com
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On July 27th, 2010 | 12:32 pm
Stuardo -StR- Rodríguez said:
This is exactly what happened to me. In my case I decided to re-negotiate with my employer to work as an independent contractor. I wrote about that in my blog, so the ones that read Spanish could check it at http://parejaslibres.wordpress.com/2010/07/20/contrataro-un-contador-personal/
In my case I was able to do this, without changing employer, but that was here in México. Probably you could advice as an expert if such a thing is possible in USA too?
On July 27th, 2010 | 4:18 pm
Megan Hughes said:
Hi Stuardo,
Babelfish to the rescue! It translated your page - I enjoyed reading your blog post.
Yes, you can often make arrangements in the USA. The rules are tax-based and overseen by the IRS.
Independent Contractor status depends on several factors. The more restrictive your employer, the less likely you can become an independent contractor. Say you must work 8-4 every day, at the employer’s office. You are assigned projects by your manager, and must report progress on a regular basis. Your employer may give you a desk, computer or other tools to get the job done. You get paid a set amount on a regular basis, and you don’t work for anyone else. To the IRS, you look like an employee, and they’re probably going to insist that you are one.
But if you can arrange to work where you want, when you want, and are responsible for delivering a finished product - and get paid on a per-project basis, that helps. Also, having more than one client you provide work for helps too.
Thanks for posting. Love the pic on your site - beautiful!
On July 27th, 2010 | 4:28 pm
Diane Kennedy said:
I am writing this from our beach house in Rosarito, Baja California right now. Where in Mexico are you working?
On August 6th, 2010 | 10:20 am
Cindy said:
Thank you Diane,
Your blogs are always timely, insightful, and well communicated. I am truly appreciative of your willingness to share and have passed this link along to fellow independents.
On September 1st, 2010 | 8:23 am
Joe said:
My wife is a dental hygienist and has the option of working as an independent contractor. I’m not sure how the IRS would look at her situation, though.
@Stuardo: Excellent post, read it Spanish.
BTW, here’s my Excaret video, don’t laugh too hard.
http://www.youtube.com/watch?v=1U1ZeOn1W3E
On September 2nd, 2010 | 5:44 pm
Diane Kennedy said:
Joe, LOVE the video!!
For your wife, if she can work for multiple dentists, I think it would be easy to prove. Otherwise, she’ll need to be able to control her own schedule, use her own tools, have an IC contract and (best answer) have a business structure too.
It would help her, tax wise, because she’ll pick up more deductions. And it would help the dentist. But the IRS will be watching.