How To Report Self-Employment Income At Tax Time

It makes no difference whether you do occasional jobs or work full-time as an independent contractor; current tax laws require that you report this income at tax time. Cash payment does not make you exempt from the law, nor does the fact that you don’t “operate” a business.People who do not operate a business simply report the total of all cash and checks as miscellaneous income on their personal tax return. Expenses are deducted there as well; however those expenses cannot exceed the income. Someone who has occasional income from a hobby activity would fall into this category.Self-employed businessmen and women report all income and expenses on Schedule C, the small business tax form. The profit or loss calculated there is transferred to their personal tax return. A self-employed individual can use any business loss to offset personal income tax debt. For many, especially during those early years, this often lowers the overall tax burden drastically.People become self-employed for a lot of reasons, but the driving force for most is the desire to make money. When you’re in business for yourself, how much money you keep in your own pocket depends on how well you understand the costs involved in producing that income. And for many, one of the biggest costs will be taxes.Self-employed people are allowed to deduct all legitimate business expenses, depreciate major purchases, take advantage of business tax credits, expense research and development costs, deduct a portion of their residence if they have a home office, and a whole lot more. And, after deducting those costs, any remaining profit can be further reduced through pre-tax benefits, business retirement account deposits, education, and a host of other items designed to keep more money in the business owner’s pocket.There are many ways to avoid paying taxes; when you do it legally it’s called smart tax planning. IRS code includes a long list of tax-free expenses that are available to individuals and business owners; you just have to know what they are and how to use them to your benefit.It is important for self-employed people to realize that income tax is not the only bill levied at tax time when you work for yourself. This is also when you determine what you need to deposit into your personal Social Security and Medicare accounts.When you work for yourself these two taxes are referred to collectively as Self-Employment Tax. As an employee, your employer is required to pay half of your FICA (Social Security) and Medicare taxes. When you are self-employed you pay both halves because you are now both the employer and employee, and that amount can be overwhelming if you’re not prepared. And that’s where tax planning really helps.Tax planning is the combination of projecting next year’s income and expenses, using current tax laws to boost retirement and insurance benefits, scheduling the taxable events in your business and personal future, looking for tax law changes that will affect your bottom line, and calculating any quarterly tax deposits. A good tax professional not only prepares your tax return, he or she also helps you with tax planning as part of your annual visit.If your tax preparer doesn’t offer tax planning you’re not getting full value for your money, and you’re probably paying too much out in taxes. When tax planning is done right there are few surprises at tax time, your return is audit proof, and you have a clear picture of your financial future. And that just makes good business sense.

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Guide To Buying Furniture Online

Before looking at furniture online, it is essential to know the exact kind of furniture that is needed. It is easy to get distracted when looking at beautiful furniture online and decide to buy something attractive that is not really needed. If there is more than one piece of furniture needed, make a list. Style is another feature to know in advance. A Danish Modern coffee table will look out of place in a Spanish style living room. Measure the space where the furniture will be placed and only look at pieces that are the right size. It is a waste of time and energy to purchase something that is attractive but is either too big or too small for the room. When it comes to furniture, size and proportion are important.Furniture comes in widely different qualities and prices. It is possible to buy several low quality pieces for the same amount as one good quality piece. A furniture budget needs to reflect this. A high quality dining room table may be required, but a low quality bookcase may be enough for a child’s room. Before looking for either, it is necessary to know exactly what is wanted. When it is time to pay for purchases online a credit card will be needed that will cover the total amount purchased.Many people prefer to purchase good quality furniture slowly and gradually build their collection. There are advantages to this because good quality furniture will last for years and not need to be replaced. In the end, this will save money. However, some people need furniture quickly to fill a new flat or home and cannot wait to gradually accumulate good quality pieces. In this case, they will buy several pieces of lower quality. One advantage to purchasing online is the lower price for good quality. Before making a decision on poor quality, look at several sites and compare prices of better quality. It is always better to buy the best quality possible at any time.Before making a final decision, check the delivery policy of the online store. Do they charge for delivering? Some will offer free delivery if the purchase is over a certain amount. If the purchaser needs to collect the furniture, there will be several things to consider. Will it fin into a car or will a truck be needed? How will it get into the car or truck? Will the purchaser need to bring someone to load it or will the shop do that? Having the furniture delivered to the home is always the best option, even if there is a small delivery fee. A high delivery fee may make the furniture too expensive.Oak Furniture is a very popular type because it is beautiful, durable and economical in the long run. The initial cost will be more, but it will never need to be replaced and will not break, sag or look worn. Dark oak kitchen furniture is very stylish and adds warmth and grandeur to any kitchen.

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Small Business Owners Pay Too Much For Health Insurance

There’s a huge misconception out there that if you own a business, you get a better deal on health insurance. The fact is, many “group” health insurance plans come with higher price tags than individual health policies.For the small business owner with 5-7 employees or less, offering to reimburse employees for their individual health insurance policies through an HRA (Health Reimbursement Arrangement) can prove a significant cost savings to the business, while giving more freedom of health insurance plan choice to their employees.In addition, the employees ‘own’ their individual plans, which means there’s no need for COBRA coverage if they leave their current employer. Since businesses smaller than 20 employees do not offer COBRA coverage anyway, individual plans become even more attractive.The biggest advantage of individual health plans over small group plans is price. Individual health plans typically offer lower premiums than similar group plans. The reason is risk. Individual health insurance in Washington State requires a health risk questionnaire be completed as part of the application process. The purpose of the health questionnaire is to ‘weed out’ the higher risk applicants with significant health risks.Most people pass the questionnaire with ease. When they do, they fall into the same group as everyone else who also passed the same questionnaire, which represents a lower ‘risk’ to the insurance company, thus lowering rates. (Those who do not pass the health questionnaire are provided the opportunity to sign up on the Washington State Health Insurance Pool, a high-risk pool with significantly higher premiums) If a business has an employee who does not pass the health questionnaire, then it can still prove less expensive to cover the high risk pool premium for that individual employee versus paying higher group rates for all employees.Group plans in Washington do not have a health questionnaire, so the insurance company has no way of ‘weeding out’ the unhealthy employees. The rates have a ‘built in’ risk factor, whether warranted or not, because the insurer has no way of separating the high risk groups from the low risk. Groups of 2-50 employees are ‘community rated’ meaning they are in the same risk pool whether their employees have low utilization or high. Therefore, the small business with healthy employees ends up paying a higher rate because of other businesses who may have employees with expensive high risk chronic health problems.Offering individual health plans to employees comes with more advantages than just lower price. They also come with less administration. Unlike ‘group” plans, there are no ‘renewals’ each year to go through, no minimum participation requirements imposed by insurance carriers, and no minimum employer contribution requirements, either. Employers still have the ability to define eligibility, probation periods, and can design their health benefit package with more options and flexibility.The Washington Health Insurance Agency has been providing creative solutions like this to small business owners for years. Give us a call at 360-464-1622 to find out if you’re paying too much for your health insurance coverage or fill out our business quote form for a free cost comparison at

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