Full Description

Written in plain English, Minding Her Own Business provides the crucial tools you need to understand your business’ finances and prepare yourself for April 15th. It gives the self-employed woman exactly what she needs to understand her taxes and establish a good recordkeeping system. Use it to maximize your deductions and make yourself more audit-proof.

Money Makers
Saving money is making money—learn how to maximize deductions, spot financial sinkholes and get credit where credit is due.

Records Check
Make sure you are keeping the right records
the right way—every time.

Alerts
Stay out of trouble by establishing a foolproof system that will prevent future headaches and minimize the risk of audit.

Filing Tips
See exactly what you need to keep the bank, the IRS and any workers satisfied and on your side.

Expert Advice
Let a licensed tax professional teach you the secrets she has already shared with tens of thousands of others.

Table of Contents

Introduction

Section 1: Getting Started
Chapter 1: Why a Tax Book for Women? -

Chapter 2: Determining What Is a Business -
- Determining When a Business Starts

Chapter 3: Choosing Your Business Structure -
- Sole Proprietorship
- Partnership
- Corporation
- Limited Liability Companies
- Choosing the Best Entity for Your Business

Chapter 4: Necessary Licenses and Permits -

Chapter 5: Bank Accounts and Credit Cards -
- Bank Accounts
- Credit Cards

Chapter 6: Balancing Your Checkbook-

Section 2: Keeping Records
Chapter 7: The Records the IRS Expects You to Have -

Chapter 8: Keeping Track of Business Expenses-
- How a Disbursement Sheet Works

Chapter 9: Keeping Track of the Money Coming into Your Business -
- Using a Receipts Sheet

Chapter 10: Ledger Books and Recordkeeping Systems -
- One-Write Systems

Chapter 11: Doing Your Recordkeeping on a Computer -

Chapter 12: Financial Statements -
- Cash-Flow Projections

Chapter 13: Inventory and Cost of Goods Sold

Chapter 14: Taking a Draw -

Section 3: Working with Employees and Independent Contractors
Chapter 15: Employees vs. Independent Contractors
- Classifying an Independent Contractor
- Form SS-8
- Seeking Help

Chapter 16: Differences Between Employees and Self-Employed People
- Insurance
- Taxes
- Evaluate Your Alternatives

Chapter 17: Employee Payroll and Withholding

Chapter 18: 1099 Forms -
- Receiving 1099 Forms

Chapter 19: Hiring Family Members -
- Hiring Your Children
- Hiring Your Spouse

Section 4: Identifying Deductible Expenses
Chapter 20: Making Expenses Deductible

Chapter 21: Business Start-Up Expenses

Chapter 22: Depreciation
- Calculating Depreciation
- Listed Property
- Section 179 Depreciation
- Bonus First Year Depreciation
- Form 4562

Chapter 23: Deducting Your Home Office
- Calculating the Home Office Deduction
- Form 8829
- Audit Risk of Claiming a Home Office

Chapter 24: Telephone and Other Utility Expenses

Chapter 25: Using Your Car in Your Business
- Keeping Records
- Calculating the Deduction
- Leasing vs. Buying a Vehicle
- Electric and Hybrid Cars

Chapter 26: Meals and Entertainment
- Day Care Meals

Chapter 27: Deductible Travel
- Domestic Travel
- Foreign Travel
- Spouse Travel Expense

Chapter 28: Insurance Deductions

Chapter 29: Education Expenses

Chapter 30: Other Deductible Business Expenses
- Casualty and Theft Losses

Chapter 31: Child Care Expenses

Chapter 32: Retirement Plans
- Tax-Sheltered or Tax-Deferred Annuities
- Traditional IRAs
- Roth IRAs
- SEP IRA Accounts
- Keogh Plans
- SIMPLE Accounts
- Self-Employed 401(k) Plans
- The Saver’s Tax Credit

Section 5: Filing Tax Forms
Chapter 33: Tax Forms Used by Self-Employed People -
- The 1040 Form
- Schedule C
- Schedule C-EZ
- More About Form 1040
- Other Itemized Deductions and Exemptions
- Self-Employment Tax
- The Tax Payments Section of Form 1040

Chapter 34: State Taxes -

Section 6: Making Estimated Tax Payments
Chapter 35: Making Quarterly Estimated Tax Payments -
- Determining Who Needs to Make Quarterly Payments
- Quarterly Payment Due Dates
- Estimated Tax Vouchers
- Federal Tax Rates
- Penalties
- Avoiding Penalties
- Form 2210
- State Estimated Tax Payments

Chapter 36: Calculating the Amount to Send Quarterly -

Section 7: Getting Help
Chapter 37: Paying Your Taxes -

Chapter 38: Getting Help with Recordkeeping and Tax Returns
- Bookkeepers
- Tax Preparers

Chapter 39: Audits
- Deciding Who Goes to the Audit
- At the End of the Audit

Chapter 40: Holding on to Records -

Chapter 41: The End (Which is Really the Beginning) -

Glossary

Appendix A: How to Reconcile a Bank Statement

Appendix B: How to Calculate Estimated Tax Payments: A Step-by-Step Example

Appendix C: Resources for Small Business Owners

Appendix D: State-by-State Taxation Department

Excerpt

Why Hiring Family Members Can Be Beneficial

Excerpted from Minding Her Own Business by Jan Zobel, E.A. © 2005

Hiring family members and domestic partners to work in your business can be an effective way of transferring income from one person to another. Transferring this income is perfectly legal and can result in some significant tax savings for you.

EXAMPLE
Inez hires her 14-year-old daughter Corinne to clean up around her home office. She pays Corinne a salary that is comparable to what she would pay any other person or service to clean the office. She is also giving Corinne the added benefit of gaining experience by having a job. Inez benefits from the arrangement by paying less tax because she can deduct the amount she pays Corinne.

EXAMPLE
Lisa owns a pet grooming business. Her life partner, Joan, has just been laid off from her job. Until Joan finds a new job, Lisa will need to pay all the household bills. Paying Joan’s share of the bills is not a deductible expense for Lisa. However, by hiring Joan to work temporarily in her business, Lisa is able to deduct 100% of the wages she pays Joan (which Joan can use to pay her share of the bills).

In general, the family member or domestic partner must be paid as an employee rather than an independent contractor, unless he or she already has her own business doing the type of work you’re hiring him or her to do. This means you need to issue W-2 forms, register as an employer, withhold taxes, pay into Social Security, and so on. (See Chapter 17 for information about your tax and withholding responsibilities as an employer.)

Hiring Your Children
A special rule applies if you hire your child. You don’t need to withhold Social Security tax as long as he or she is under age 18. Your child won’t owe any income tax until his or her total income for the year is over approximately $4,900 (the exact amount increases each year). Although you do need to issue a W-2 form, if he or she will have less than $4,900 total income, you don’t need to withhold income tax from his or her paycheck.

Inez, from the previous example, pays Corinne $3,600 during the year. Corinne also has $100 in interest income from a bank account. Her income is under $4,900, so Corinne doesn’t owe any tax. Meanwhile, Inez deducts as a business expense the $3,600 she paid Corinne, saving approximately $500 in self-employment tax and $1,000 in federal income tax.

Note: Corinne could have a total income of $7,900 and not owe any tax if she contributes (or Inez contributes for her) $3,000 to a traditional IRA retirement account. While it may be hard to imagine a 14-year-old contributing toward retirement, those who begin saving for retirement at a young age will need to contribute far less and will have more retirement money than those who start contributing later in life.

Hiring your child is a wonderful way to be able to deduct your children’s allowances or college funds. However, the child (or other family member) must actually perform the work he or she is being paid to do. His or her pay must also be commensurate with the work he or she is doing and with his or her age and abilities.

Hiring Your Spouse
Hiring your spouse to work in your business can provide benefits to both of you.

EXAMPLE
Susan hires her husband, Daniel, as a sales rep for her office equipment sales company. Susan provides health insurance for all her employees, including Daniel. Daniel’s policy covers his spouse (Susan) and their children. Susan is able to deduct the full cost of the health insurance policy as a business expense.

Normally, a self-employed person can deduct 100% of the health insurance premiums she pays, but not as a business expense. (see Chapter 28.) In other words, the cost of a business owner’s health insurance provides an income tax deduction but doesn’t reduce her self-employment tax. However, in this example, Susan is able to deduct 100% of her health insurance cost as a business expense since it’s part of the policy she provides for Daniel.

Other benefits, such as reimbursement for child care expenses, can be offered to employees of your business. If your spouse is an employee, he can take advantage of the benefits, saving you both money.

Note: Any benefits you offer must be available to all employees. If your spouse is currently the only employee but you anticipate hiring additional workers in the future, consider carefully before setting up an employee benefit program.

If your business is incorporated, you are treated as an employee of the business and will be eligible for most employee benefits offered by the corporation. As a sole proprietor, however, you are not an employee of your business. This means you can take advantage of such benefits as child care or medical reimbursement programs only if you offer them to your employees and hire your spouse as an employee of your business.

Obviously, there are more than tax ramifications to be considered in deciding whether to hire a family member. You will want to seriously think and talk about the potential personal effect of being in business together. However, with proper planning, hiring family members can be an effective tax savings move.
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