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Frequently Asked Questions

Am I self-employed?

 

Why do I need tax strategies?

 

What if I have a CPA or tax preparer?

 

How important is record keeping?

 

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Am I self-employed?

 

If you receive a 1099 tax form for your income, you are self-employed. In general, the term self-employed also applies to:

 

  • One owner or husband-and-wife owned businesses
  • Statutory employees
  • Partnerships owned by a husband and wife
  • Corporations owned by one person or by a husband and wife
  • LLCs owned by one person or by a husband and wife

 

You ARE NOT self-employed if you are a common law W-2 employee.

 

 

Why do I need tax strategies?

 

Taxes are the biggest and costliest expense you incur in your business. You either know what you are doing or not.
 

Tax law requires that you have specific types of records to prove your deductions. You either have those records or not.
 

Tax law can eliminate, decrease, or increase the profits on investments and business transactions. You either know the impact and make it work for you, or you suffer the consequences.
 

The Tax Foundation, a Washington, D.C. think tank, says that taxes cost you more than two times your next largest expense, which is housing and household costs. Wow! It just makes sense to get a handle on this big expense.
 

 

What if I have a CPA or tax preparer?

 

Expecting your accountant to maximize your tax deductions is like expecting your dentist to brush your teeth every night. Learning tax strategies for yourself creates a better relationship with your tax preparer.
 

Preparing your taxes is NOT the same as taking care of your taxes. In order to take care of your taxes, your accountant would have to follow you everywhere and record all of your expenses on a daily basis. This is simply not realistic.
 

People always complain that their tax preparer is not aggressive enough when it comes to deductions. Learning and practicing tax strategies will ensure that you never feel this way again. By recording the right tax deductions in the right way, your tax preparer will finally have the data to be aggressive on your behalf and limit your tax liability.
 

 

How important is record keeping?

 

VERY important - if you want to stay in business and remain profitable. Your odds of an IRS audit are increasing every year. Between 2004 and 2005, the IRS doubled its audits of Form 1040 – Schedule C taxpayers, and S corporation returns (See the 2005 IRS Data Book). Further, the IRS has been hiring increasing numbers of S corporation examiners in recent years. Translation: you need to know what you are doing.
 

As a self-employed professional, your odds of an audit are increasing every year with the IRS’s growing emphasis on small businesses. Half of all audits are executed at random. So, no matter what you do, even if you take no deductions at all, you may still face an audit. The best way to protect yourself from an audit is to be prepared; learn what you can and cannot do, and learn the easy way to keep the right records.
 

 

Contact Us

For further information on how you can benefit by using the Bradford and Company, Inc. line of tax solution products, please contact us at any time:

contactus@bradfordandcompany.com

 
Or, you can reach us toll-free at:
(877) 829-9673