10

Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.


9

No. Current account is not a requirement. You can use savings account. You would need to pay taxes on interest. Savings account have limitation on number of withdrawal in a quarter, hence most sole proprietorship have current account. Edits: Historically the withdrawals were by Slips/Cheque. The restriction was on these and not on standing instructions. ...


9

FICA taxes are separate from federal and state income taxes. As a sole proprietor you owe all of those. Additionally, there is a difference with FICA when you are employed vs. self employed. Typically FICA taxes are actually split between the employer and the employee, so you pay half, they pay half. But when you're self employed, you pay both halves. ...


6

You can see some IRS info on distinguishing a business from a hobby here. Nolo also has some info. The upshot is that you can only deduct losses if your activity is, in the judgement of the IRS, a for-profit endeavor. You don't have to make a profit right away, or make a profit every year, for it to be a for-profit endeavor, but you have to be able to ...


5

They believe that it reduces the risk that Revenue Canada will deem you to be an employee and make them pay a whole pile of tax, EI, CPP and so on that should have been paid if you had been hired as an employee. It's my recollection that the employer gets dinged for both the employee and employer share of those withholdings (and generally the employer's ...


5

Since it's a sole proprietorship, all of the business's assets and liabilities will now be owned by the estate. The estate (in the person of the executor or executrix) then handles winding everything down. While still of sound mind and body, the spouse who owns it all should get with an estate attorney and plan all this out (including who will be the ...


5

It's more complicated. Most important, when you own a limited company, you and the company are separate legal entities. You own the company, but you don't own its money. What typically happens to be really tax efficient: You are employed by your company. The company does contract work for others, you as a person do the work. The company pays you about £8,...


5

No, you can’t. 401(k) plans can only be contributed to by payroll deduction. Once you leave the employer, there is no way to make additional contributions. You are allowed to leave the money in that 401(k) plan when you leave, but you can’t make any additional contributions. If you want to close that 401(k) account, you can roll that money into an IRA or a ...


4

No. The equipment costs are not necessarily a direct expense. Depending on the time of purchase and type of the expenditure you may need to capitalize it and depreciate it over time. For example, if you buy a computer - you'll have to depreciate it over 5 years. Some expenditures can be expensed under Section 179 rules, but there are certain conditions to ...


4

I'm assuming this is the UK given the mention of "council tax", though I'm not sure where your personal allowance figures come from - the personal allowance for 2015/2016 is £10,600 and for 2016/2017 is £11,000, so (£30,000 - two allowances) would be less than £13,600. However in any case your predictions are wrong for two reasons. Firstly, the personal ...


4

An LLC is a very flexible company when it comes to taxation. You have three basic tax options: LLC taxed as sole proprietorship -- This is very easy to do, but you will be taxed the same as if you don't create an LLC. If your only concerns are taxes, this won't help you. LLC taxed as S-Corp -- There are ways to reduce your tax burden if you choose to have ...


4

In general when filling in the Self Assessment web form, you should leave fields blank if they would be 0.


4

Like D Stanley said, hiring the accountant in charge of the business/restaurant is likely the best you can do if you don't want to visit it often. But since it is a small business, maybe your friend is going to do the accounting by himself on an application or website (like quickbooks.com). In that case you could (and should) go take a look at the expenses ...


4

Note: I am neither an Australian nor a registered tax practitioner. This is not tax advice. As far as I can tell, while any net income from the side-business would be lumped-in with your regular salary for income tax purposes, your regular salary will not be added to your business turnover for GST-threshold purposes. First, note that as a sole trader, any ...


3

You can charge a fee to accept checks, although I think the better solution might be to offer a small discount for early payment of your invoices. As some people here have suggested, why not add a small bit to your fees to begin with to cover your inconvenience in the case they choose to pay by check? I often will give clients a small discount of 1.5% ...


3

This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted ...


3

People who work don’t have the right to a payslip if they’re: not an employee, eg contractors, freelancers or ‘workers’ - read about the different types of employment status in the police service a merchant seaman master or crew member working in share fishing (paid by a share in the profits or gross earnings of a fishing vessel) Payslips must show ...


3

You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either. Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is ...


3

To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would ...


3

As a sole proprietor, the tax liability of your business is calculated based on combining your business income with your personal income together. It is good advice to keep all personal and business financial matters separate. This makes it easier to prove to the IRS that all your business expenses are actually business related. In this case however, the ...


3

I know of no 401(k) that will allow a former employee to contribute new money into a 401(k) program with two possible exceptions: The final paychecks, which are likely to be after the last day of work. In the case of paying out of leftover vacation hours, or a severance pay, that can be weeks or months after the last day of work. It is possible that they ...


3

The tax return has a section for completing business income. Reporting sole-trader income is very straightforward and easy to complete using MyTax online. As a sole-trader your business income is simply part of your normal personal tax return. https://www.ato.gov.au/Individuals/Tax-return/2018/Supplementary-tax-return/Income-questions-13-24/15-Net-income-or-...


2

No, do not file a Form 1099. You should not issue a form to yourself and you have no separate entity to issue one. The reporting obligation is Form 1040, plus Schedule C. You may have followed a wrong turn somewhere in the TurboTax questionnaire or it may not have picked up the subtleties of your situation. The business income is already yours. Some ...


2

I remember being told that purchases made in the last quarter of the year can't be deducted entirely in that tax year; instead, they have to be depreciated over their expected life span (5 years for computing hardware). Is this true? It is true. In fact - it doesn't matter which quarter you made the purchase in. Computing hardware has to be ...


2

As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros The tax situation is more flexible. As a sole trader all profits are considered income and subject to income tax and class 4 NI. With a LTD company ...


2

Current account offers a lot of benefits for sole proprietors. Think of it like bank account for a company. The bank provides a host of facilities for the company. A sole proprietor does not have enough value as that of a company for a bank but needs similar services. Thus Indian banks offer a toned down version of the account offered to a company. Current ...


2

To answer your question 2, I can't think of any advantage of using your SSN over an EIN, but there are some advantages to having an EIN as a sole proprietor. So depending on the answer to question 1, you may want to consider either keeping your existing EIN or getting a new one, even if you are allowed to use your SSN instead.


2

I would keep track of the revenue and expenses by asking him how his business is going periodically over a beer and not investing in it at all. Even though I'm comfortable with my original answer, I'll elaborate because this comment gets to the heart of the matter. you noticed details I didn't even think about, it's my first time, I get the feeling that ...


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