I recently started taking on some side work which is making a decent amount of money for me on the side. I am operating it under my own SS# currently and not an LLC. I was hoping someone could provide me with some tips on how to properly manage the side work income so I am not biting a large uncle sam bullet at the end of the year. I have searched this site and found some helpful answers already but not all that I was hoping to have answered. I am a software developer so of course my side work is working for a client creating a piece of software which doesn't have much over head other than just my time. So here it goes..
1) Tax write offs? Do I have to have a LLC established in order to use business type tax write offs? I honestly do not have much, I bought a printer so I could print out some items required for the job and that is all I really use it for. I was possibly thinking about upgrading my laptop to a newer higher end laptop so I could be more efficient with my work. I don't drive anywhere and I do not see much else I could write off. I do not have an office as I work right in my living room so I am assuming I could not write any part of that off either. We do now and then have business lunches to discuss the project in a central location but I do not feel that is a big line item either. Do I need an LLC for the write offs and with the little bit if any that I have would it even be worth it?
2) Finding a Tax Professional/Financial Adviser? I would like to speak with someone about my tax situation and probably more of a Financial Advisor. I am at a point with my income level that I feel my money could probably be managed a little better and I am looking for some guidance. How do you chose someone that you can trust their advise and how can you verify their experience? Would you trust someone that is purely online or would it be best to have someone in person? I do not know anyone else who uses a financial advisor so I cannot really reach out for personal recommendations. Also, how much do Financial Advisers usually charge and what is the frequency I should be consulting them?
3) Paying Taxes? The side work I am performing will be claimed by my client but I am essentially doing a 1099 (though I do not recall filling one out) so I am getting 100% pay with no taxes taken out. I was reading in another post my tax bracket is around 28%, what is the best way to handle putting that money aside? I unfortunately have burning bank accounts and the moment money lands in them it gets spent due to honestly partially my lack of self control, some "emergency need", my wifes need to spend, and my childrens general needs. Is there a way to pay the government as I go or do I have to hold onto this tax money for a year and pray I saved enough to cover the taxes? I am one who prefers to pay my bills in advanced or immediately when they come in so I know that responsibility is taken care of. I struggle with holding on to money for longer periods of time.
4) Side Work Money Division? The side money I am bringing in is basically all profit, I have no really needs for the money so I am freely spending it. I feel guilty as I feel I should be utilizing this money a little wiser. I have some debts, credit cards(just 2), cars(2), house, and accounts on my credit that need to be paid off even though I do not agree with them as they are medical from car accidents related to a lawsuit I'm currently pursuing against the at fault party. I feel I should be allocating a % of this income to different locations of my life like Taxes, Savings, Debts, Investing, and of course FUN/Materials! I was wondering if there is a recommended split or a good rule of thumb that would help me better allocate my money. Right now it all just goes towards materials, paying of some debts, and weekend getaways, the paying debts makes me feel not so guilty but I feel there could be a better allocation of my funds. Any rule of thumbs or good practices when allocating "extra" money?
Well I have a bunch more questions but I have a feeling I will be told this post is too long so I will stop here. Any recommendations would be appreciated, especially in the realm of finding a trustworthy, educated financial adviser.