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Author: LAPropDoc Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121169  
Subject: Book for the Self Employed? Date: 5/29/2003 10:30 AM
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Hello,

This is the first time I've posted here. The board was recommended by TMFKGOMalley.

I'm self employed, working as an effects artist in Hollywood. I went from employee to self employed several years back, and haven't been itemizing my taxes (yeah, I know, dumb). Anyway, I've been collecting my receipts since January, and am wondering how to start organizing them (catagories of acceptable expenses, etc).

Could people recommend some books for me? I looking for first a general accounting style book, then anything specific for my situation.

thanks,
doc
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65575 of 121169
Subject: Re: Book for the Self Employed? Date: 5/29/2003 11:12 AM
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Could people recommend some books for me?

I'd start with IRS Publication 334. You should also get a copy of Pub 560, which deals with retirement savings vehicles available to the self-employed.

That said, I strongly recommend that you spend some time with an accountant learning about allowable expenses and your tax requirements. You'll save much more than it will cost you.

Phil Marti
VITA Volunteer

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Author: RiverCityFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65576 of 121169
Subject: Re: Book for the Self Employed? Date: 5/29/2003 12:50 PM
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I second Phil's suggestions, and also suggest that you check your library for Don't Let the IRS Destroy Your Small Business: Seventy-Six Mistakes to Avoid by Michael Savage. It's a quick read with many excellent pointers.

Also, I'd start a separate checking account for the business and get a credit card that you use strictly for business (or you could dedicate one of your current cards to business from here on out). That will make it much easier to track your business expenses. When you need money to live on, write a check from the business to your personal account.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65582 of 121169
Subject: Re: Book for the Self Employed? Date: 5/29/2003 8:12 PM
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Phil's has already suggested that you see an accountant. At the same time you can review if it worth filing amended returns for upto the previous three years. Expenses are deducted directly from income and, therefore, not subject to self employment tax or income tax. Normally, itemizing is associated with deductions on Schedule A. I believe, you are referring to expenses that would be reported on Schedule C and not Schedule A.

Debra

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Author: LAPropDoc Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65583 of 121169
Subject: Re: Book for the Self Employed? Date: 5/29/2003 9:24 PM
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I'd like to be familiar with things, before seeing the accountant. One of the companies I vendor for most of the time uses one, and says he's good, but how do I know that?

While I'm sure to use one at the end of the year, I'd rather not walk in there with a box full of random receipts. I'd like to be able to know at least what catagories to place them into, plus what expenses I should keep receipts for.

I looked at Pub 334, but couldn't get any of the IRS pubs to download. Something wrong with the site. I'm also going to look into the retirement accounts for self employed, IIRC you can put more than the $3000 limit a 401 has.

I did look over 334 on the IRS site, unfortunately it reads like a IRS publication (grin).

Many of the books I've looked over on self employed (aka small businesses) tend to spend alot of time on how pick one, set it up, and run them, not tax and accounting concerns. I've been doing this long enough, that the business runs well, I've just not been taking the itemized deductions.

And since I didn't make it a habit of collecting receipts, I can't go back and amend my returns :(

doc

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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65585 of 121169
Subject: Re: Book for the Self Employed? Date: 5/30/2003 2:27 AM
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The Pub 334 is a big document. I'd call 1-800-829-FORM and ask them to send one.

Another source of information might be the Small Business Administration. You can access any government agency through www.firstgov.gov.

Phil

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65588 of 121169
Subject: Re: Book for the Self Employed? Date: 5/30/2003 10:05 AM
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I'd like to be familiar with things, before seeing the accountant. One of the companies I vendor for most of the time uses one, and says he's good, but how do I know that?

While I'm sure to use one at the end of the year, I'd rather not walk in there with a box full of random receipts. I'd like to be able to know at least what catagories to place them into, plus what expenses I should keep receipts for.


That's why you see the accountant NOW. You don't bring your receipts. You bring your head. You will describe your business, what you do, where you spend money, how you make money. The accountant will ask questions and provide advice. S/he doesn't need the documents at this stage.

I looked at Pub 334, but couldn't get any of the IRS pubs to download. Something wrong with the site. I'm also going to look into the retirement accounts for self employed, IIRC you can put more than the $3000 limit a 401 has.

I did look over 334 on the IRS site, unfortunately it reads like a IRS publication (grin).


They're not that difficult to understand once you get used to the style. Keep at it and you'll see.

Many of the books I've looked over on self employed (aka small businesses) tend to spend alot of time on how pick one, set it up, and run them, not tax and accounting concerns. I've been doing this long enough, that the business runs well, I've just not been taking the itemized deductions.

All the more reason to see an accountant now. You are not looking for itemized deductions, you are looking to track your business expenses which are deductible as part of your gross income (page 1 of Form 1040), not as standard/itemized deductions on page 2.

And since I didn't make it a habit of collecting receipts, I can't go back and amend my returns :(

Again, don't be so sure. There are other ways of generating documentation. If the expenses were charged on a credit card, you may be able to recover the receipt from the cc issuer or the merchant. If they were paid by check, your cancelled check may be sufficient. Let the accountant guide you. You obviously won't recover 100% of your allowable back expenses but you may be able to reconstruct enough to make filing amended returns cost effective.

Ira


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Author: LAPropDoc Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65601 of 121169
Subject: Re: Book for the Self Employed? Date: 5/30/2003 6:14 PM
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That's why you see the accountant NOW. You don't bring your receipts. You bring your head. You will describe your business, what you do, where you spend money, how you make money. The accountant will ask questions and provide advice. S/he doesn't need the documents at this stage.


That makes good sense. Thanks.

doc

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Author: pills One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65617 of 121169
Subject: Re: Book for the Self Employed? Date: 5/31/2003 6:57 PM
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That's why you see the accountant NOW. You don't bring your receipts. You bring your head. You will describe your business, what you do, where you spend money, how you make money. The accountant will ask questions and provide advice. S/he doesn't need the documents at this stage.

That makes good sense. Thanks.

doc


Doc, if you can make such good sense as you do of all the Mechanical Investing writings, the IRS pubs should quickly become duck soup to you!

Just to add one more thought, which a tax specialist will probably bring up too, you may be able to use the C-EZ form. Essentially this is for the simple personal services kind of business where you have no equipment to depreciate. You can still deduct other business expenses, mileage for business travel, and account for changes in inventory value (for simple cases) -- should you have any.

PS: I enjoyed your work on the 24 hours show; those devices looked pretty realistic!

Karl (a TCE/AARP Tax-Aide volunteer)

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Author: LAPropDoc Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65620 of 121169
Subject: Re: Book for the Self Employed? Date: 5/31/2003 8:41 PM
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PS: I enjoyed your work on the 24 hours show; those devices looked pretty realistic!

Yeah, we were very proud of the bombs we did. I'm in the process of setting up a website for MI, but I'm going to have a page with prop photos in there. I'll post the address once I've got it up.

doc

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Author: bacon Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65621 of 121169
Subject: Re: Book for the Self Employed? Date: 6/1/2003 4:34 PM
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<<Could people recommend some books for me? >>

Aside form the books, I've always found this URL to be of use:

http://www.irs.gov/businesses/small/index.html

Also, keep trying on the IRS pubs downloads (if you have a highspeed connection); the government's servers aren't always up to snuff, and they get overloaded easily.

Eric Hines


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