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Ways Through the Maze: A Tax Guide for Indies

#4 Recodkeeping 
Hello Fellow Indie,

Recordkeeping takes attention but it isn't all that complicated. In this month's e-letter I'll pass along two examples of steps you can take toward simplification.  
 
As are all my slices of indie life, these questions come from my blog Q&A archive.  
For more info please check out
  • my site
  • my blog
  • my book, SELF-EMPLOYED TAX SOLUTIONS



  • Wishing you success in your indie venture,
    June Walker
    [email protected]
    June Walker
    Consultant to Indies
    June's Book
     
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    Ways Through the Maze

    Will bring you clear and simple solutions to complicated situations about
    • income
    • expenses
    • taxes
    • recordkeeping
    • indie pensions
    • being self-employed

    The Why of

    Ways Through the Maze

    To guide indies to a more simple and secure tax life. 

    To promote indie-business self-confidence. 
     
    To humanize tax issues with glimpses into the lives and concerns of self-employed people. 

    Each issue will include one or more Q&As that come out of real-life situations of indies who have visited my blog or my website.  
     
    From time to time I'll also announce indie happenings of interest to you.

    Look below for this month's

     Slice of Indie Life 
     
    Keep records? Beyond income, the choice is yours .
    Here's an abridged version of an email I received from a distraught indie in North Carolina. You may be surprised at my response to him. Take a look.

    June -

    I am a self employed web developer and have really fouled up my financial life and have been in denial of the situation and desperately need to turn things around.

    I don't see this as an excuse but I am young and being self employed kinda just happened and I have really messed up my financial life as the result of this. I am in need of help. No millions of dollars in debt kind of help but to the point where if I ever want to own a house or have decent credit I need to do something. What choices do I have?

    Often the most scary part of a situation is just not knowing where you stand and that is how it's been with my finances, pretty sad but true.

    I filed a return for 2005, though I pretty much owe money on all of them still. So hard to catch up on it once you get behind.

    Mid year I started putting some money away in a CD so I couldn't touch it, and didn't think when I started it but I cannot get that money out until May.

    I have to admit that with this stuff my brain just shuts off. It is difficult for some reason. I get overwhelmed by just the thought of taxes and my situation and all I need to do. Do I have a choice?

    Do you still take on clients? If so, would you take me on as a client?

    Jim in Raleigh, NC



    Dear Jim,

    The bad news is that you were in denial and your financial life is really fouled up. The good news is you're young so it can't have taken hold for so long that it's unchangeable. If it's going to take time to straighten out, you've got a lot of years ahead of you in which to do it..

    Before we talk about being a client or specific tax years. Let's look at where you're at and how to move out of that spot.

    You're a web developer so I'm sure your brain can handle taxes. It's not your brain that shuts off. The shut off valve is somewhere else. You need to figure out where it is and whether or not you want to turn it on.

    A few days ago I went to meet with a website design/developer company in Santa Fe. After speaking with the folks there and then coming home to tell my husband about it I realized that the relationship of me and my website is a lot like a client and his taxes . To have a good website, I can't just rely on the experts to do it. I must have a lot of input and do a lot of the thinking and planning myself. If I don't, my site won't do what I want it to. I have to make a choice about how much time and effort I want to put into it. Same with you and your taxes and recordkeeping.

    You need to decide whether or not you want to learn about the money side of your business. You don't have to.
     
    All you must do is record and claim all income, and pay taxes.
     
    The government doesn't care about expenses if you choose not to deduct them.
     
    If you decide that, for you, your time and energy are better  spent working rather than recordkeeping, then that's OK. The result: You spend less time on money chores but you spend more money on taxes.

    You see you do have a choice.

    Best regards,
    June
    Simple Recordkeeping: No Business Checking Account Required
    Hi June,

    I was poking around on the web for information and I found your book and your site. I just ordered your book, but I have an immediate question. I'm a self-employed sole proprietor. My business is video production and editing. I am about to invest in a computer and editing software so that I can edit at home. My husband is eligible for a discount on the computer and the software - I am not. If he buys the computer and the software, and then I in turn write him a check and buy it from him - will I be able to claim the computer and the software as my business expense?

    Thanks in advance for your advice.
    Stefani
    Elizabeth City, North Carolina

    P.S. You happen to live in my favorite place - Santa Fe. I lived in NM for a few years as a child and have never gotten it out of my system. I still have fond memories of my last trip there a few years ago and my visit to Ten Thousand Waves.



    Hello Stephani,

    Your husband can buy the computer, or spend money on any other business expenses for you and they will be deductible as your business expenses. You do not need to reimburse him. You don't even need separate checking accounts. You will see why when you read my book.

    It's all a lot more simple than most folks think. And a lot more simple than most accountants will lead you to believe.

    And, on your P.S. I feel the same way about Santa Fe. We came. We saw, We loved it. We're here forever. And here's a little weird thing, well, sort of. I married my first husband in front of a justice of the peace in Elizabeth City, North Carolina. He was an actor. Civil rights was a hot topic. Ah, yes, I remember it well.

    Cheers,
    June