Show Me The Money

Atlanta Office 1800 Peachtree St. Suite 809 Atlanta, GA 30309 404-352-9019

Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367 818-986-2665

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Show Me The Money

Shannon Nash, Esq., CPA

The Nash Chronicles http://thenashchronicles.wordpress.com



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Blogging As A BusinessTypes of BusinessTax Records (1099) and BookkeepingPopular Deductions Audit IssuesTaxes: what and when you have to pay

Highlights



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Anything you do with a Profit Motive

DBA and 1099s = Business

A Business Is….



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Hobby = an activity just for the fun of it with no profit motive.

Typically no DBAs or 1099s

A Hobby Is….



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Report all of the income but may not be able to take all of your hobby related deductions.

Hobby Losses are treated as miscellaneous itemized deductions (i.e., which must be greater than 2% of your adjusted gross income before they are deductible).

If Hobby Losses > hobby gain = no extra deduction

Hobby Gain always has to be reported as income, regardless of the amount of hobby losses.

Hobby vs Business

Report all income and all

deductions

Business losses are fully deductible on Schedule C

If Business Losses > Business income = extra deduction against W-2 income

The net business gain or loss is what gets reported.



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DBA (Doing Business As)

Sole ProprietorshipLLC (Limited

Liability Company)S Corporation

Types


Los Angeles Office 6320 Canoga Ave., 15th Floor Woodland Hills, CA 91367

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As a “Business Owner” you Must…

Generateyour ownincome

Fund yourexpenses

Contribute toSocial Securityand Medicare

Track andreport

income andexpenses

Pay incometaxes on

your profit

Pay taxes atleast 4 times

per year

Track andreport

any paymentsto contractors



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You will get this form if you receive $600 or more for your services.

Include the amount listed on Form 1099 as compensation on your Schedule C, Profit or Loss from Business (Form 1040).

DO NOT attach Form 1099 to your tax return. Instead, just keep a copy of this form for your records.

Form 1099



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Report all of your business income

Report business losses

Net profit or loss is the included on the front on your 1040

Schedule C



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Key “Deductions”

Only 50% deductible

Meals & Entertainment

< $250,000 on equipment?Write it off

Depreciation

$.55 per mile

Mileage

Come up with a BusinessPercentage. Can’t take

personal use.

Phone & Internet

X

Home office deduction (form 8829)

% ofsquare footage

for office

Householdexpenses

(rent, insurance,Utilities, etc)



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Other Deductions

Advertising Trade Publications Dues/Subscriptions

Legal Fees Accounting Fees Contractors

Business Entertainment

Equipment Repairs Payroll

Business Travel Local Transportation Telephone

Seminars Office Supplies Insurance

Postage & Delivery Business Gifts Copying

Bank Service Charges Research & Reference Office Furniture

Retirement Plans Contributions Office Utilities

Merchant Fees Computer Website



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The self-employed and those earning over $100,000 annually are especially at risk for an audit.

Do your best not to attract unwanted attention. If you don't wish to call attention to your tax return, don't do anything to raise a red flag.

Be honest. When it comes to the IRS, honesty is truly the best policy.

Avoiding An Audit - Rule of Thumb



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Double and triple check your math.

Many are chosen for audits because of errors on tax forms.

Avoiding An Audit - Math is Key



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Report all income, even if it's cash or tips

Especially all monies reported on W-2s and 1099s.

The IRS “matches” these forms with the numbers that you put on your tax return.

Avoiding An Audit - The Matching Rule



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Be fair with your deductions.

Over-inflating numbers is almost the same as calling up the IRS and saying, "Audit me!"

Avoiding An Audit - Inflation



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If your business can’t show a profit in three-out-of-five years, the IRS will typically presume that you are not operating a business, but you are running a hobby.

Presumption can be overcome with good records and proof of business motive

Avoiding An Audit - 3 out of 5 Year Rule



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The self-employed and those earning over $100,000 annually are especially at risk for an audit.

Many of these people are sole proprietorships filing a Schedule C.

The risk of an audit for corporations, partnerships and limited liability companies (with multiple owners) are significantly lower.

Avoiding An Audit - Time to Incorporate?



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W-2s1099sBank statementsCredit card statements/year-end summariesHouse related statements/expensesReceipts for business expenses or related to

improvements on your homeMileage logs/recordsReceipts for meals and entertainment

Documents to Keep



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What Taxes to Pay and WhenSelf employment taxes Social security: 12.4% of first $106,800

income Medicare: 2.9% of all income

Income taxes Based on total household income

Quarterly payments 1st quarter: April 15

2nd quarter: June 15

3rd quarter: September 15

4th quarter: January 15

Avoiding penalties No penalty if you pay either: The same amount you paid last year 90% of what you should pay this year

Penalty for underpayment Interest on the amount of underpayment, currently at 4%



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ResourcesTax forms

Profit & Loss (Schedule C) www.irs.gov/pub/irs-pdf/f1040sc.pdf

Home office (Form 8829) http://www.irs.gov/pub/irs-pdf/f8829.pdf

1099MISC http://www.irs.gov/pub/irs-pdf/f1099msc.pdf

Online services

Sample independent contractor agreements

www.docstoc.com

Online invoicing and time tracking

www.freshbooks.com

www.harvest.com

www.blinksale.com

Paypal www.paypal.com

Nolo’s Small Business Taxes http://bit.ly/Vn50B

Online bookkeeping www.outright.com

http://oe.quickbooks.com



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Blog - http://thenashchronicles.wordpress.com

Myspace - http://www.myspace.com/shannonnash

Media Page -http://www.nashgroup-usa.com

Shannon Nash Contact Info



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Q & A