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Ways Through the Maze: A Tax Guide for Indies

#5: Help in a Changing Economy
November 2008
Wow, self-employment is changing. In my years of working with indies, most solo ventures were the province of movers and shakers determined to go out on their own, to take a chance, to fulfill a dream, to meet a goal.

Now, as the economy grows more dank and dismal, that breed of indies is being joined by a new breed -- indies in a more gritty state of mind.  
 
Some are trying self-employment because they lost their jobs, others because their hours have been cut and they need a flexible way to supplement income.

Whether starting a new business, or converting a hobby to a money-making venture, anyone new to the indie way of life has lots of questions about how it works. If you know someone in that predicament - which is, incidentally, also an opportunity - let them know that they can find answers at my website and blog. 

Below are two indies who are doing the best they can. As always their questions come from my blog Q&A archive. 
 
Keep moving forward with confidence. 
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 
 
Newly Self-employed AND Working at a Job
Hi June,

I've recently started a new lawn care business, but I still retain a full time job. When I do my taxes how would I go about that? Would I have to do them separately, or could I combine both my income from my job and the income from my lawn care business in one form?

One other question  -- when I do this either way, am I able to write off the equipment that I bought for my business?

Thank You.
Jack from Pennsylvania

Hi Jack,

Congratulations on your new business.

As a sole proprietorship -- that is the structure of your business -- you do not file two separate tax returns. There will be additional pages in your individual [or joint] tax return that relate to your lawn care business.

You may deduct from your business income each and every business expense that you have including the daily paper if you buy it to check the weather forecast.

I can tell from your questions that you need a lot of information. I suggest that you start by reading Is it a deductible business expense? on my website and Estimated Taxes on my blog.

If you like what you read there, I encourage you to buy a copy of my book, Self-employed Tax Solutions. The book answers many of the most common self-employed questions in the same easy-to-understand style you'll find in my columns.

I wish you much success in your new venture!

Best regards,
June Walker

11/08 PS: Self-employed Tax Solutions is now on sale.
Converting from Personal Use to Business Use
Maureen, from Las Vegas, Nevada asked:
 
First, I love your Self-employed Tax Solutions book! ...

Can I take a deduction for the furniture and office equipment in my home office? I bought the furniture about 14 months before becoming an indie and I do have the receipt for it. My fax machine, printer and laptop are quite a bit older. I don't have receipts for them or know what I originally paid so I don't know their estimated current value.
 

Maureen, the short answer is yes you may treat the furniture and office equipment as business costs.

And your cost is whatever you could sell them for at a thrift or secondhand shop as long as that amount is less than what you paid for the item.
 
If the current thrift-store-value value is more than you originally paid, then you can deduct only as much as you paid for the item. .

Caitlin Caterer and Eddie Electronic are new to self-employment. Here's a more detailed explanation of their equipment and supplies conversion, on my website at How to convert equipment and supplies from personal use to business use. The column is excerpted from my book, Self-employed TaxSolutions.

Best,
June