Have u ever been self-employed? how did u start filling Ur taxes?

Question

i have no clue when it comes to pay taxes. i don't want to do it by accountant, my business is simple such as cutting people grass.

"i don't have a license for self-employed" and this is Michigan state.

here is what i know so far, correct me or add things to it:

1st step: open bank account
2nd: use that bank account to buy all necessary tools and keep its reciepts.
3rd: ask customers to send you a check to that bank account? and keep all their check returns.
4th step: keep do all these steps above till 2008 until you file your Schedule SE tax form & schedule C form along with 1040 income form.
5th step . send all reciepts you have saved along with all these tax forms to IRS address?

anything more need to be done?

i didn't start any business yet

Answer 1

My husband and I sometimes do freelance work. We use turbotax.com. It walks you through everything. But I'm not sure that what you are doing is completely legit. You may want to go to H&R Block, Jackson Hewitt or an accountant. It costs more, but they may help get you straightened out

Answer 2

I think you are worrying too much. The only thing that Uncle Sam wants to know is how much you made so you can pay the appropriate amount of tax.

Go to an accountant. He will tell you that you can file as a "Small Entity". The advantage to the accountant is that you can give him all of your costs, like Mower and equipment, gasoline, travel expenses and so on. The accountants are not there to take all of your money! They charge by the time it takes to figure out all that is necessary, saving you the worry and trouble of doing something you don't understand,i.e. taxes. Stay away from H&R Block! They will scare the jebeebers out of you in their own interest! Get an accountant that does regular family taxes. As you grow in life, you will need to file taxes anyway and it gets complicated if you earn other monies not associated with your self employment.

All of the steps you listed are good ones except #5. DO NOT SEND ANYTHING TO THE IRS except the forms the accountant fills in for you. He will keep your records on file in his computer from year to year as your business grows. He will also make out the pay for any employees you hire,deducting what is nessessary.

Keep in mind, because you love the business you are about to venture into, doesn't mean that you know everything about business. So, you hire people that do know and that is your accountant.

I don't know about Michigan laws, but, as an American, the Constitution gives you the right to establish your own business. Getting a llcense (if required) should be as simple as asking and filing.

Answer 3

upon registering with the irs for a business tax ID number, ask them for tax instruction documents. Usually they come with it anyway. In these documents it will tell you everything from how to work your business taxes and also how to avoid fines and penalties. Do your taxes quarterly instead of annual or bi-annual and you will pay less taxes and get more in the end.

When applying for the tax ID, claim that you are a maintenance or a repair business as apposed to a contractor. By doing this, you also do not have to get a liscence or be bonded. Check with your state to see if a sales permit is required though. You are right on track with the steps that you have alreayd mentioned, however, you do not have to claim that you are a business under a business name. By claiming that you do business as a sole proprietorship without any employees, you can avoid alot of business taxes that others have to pay and still legally be able to run a business on a standard residential phone line too. Much Much cheaper.

PS. It doesnt cost a peeny to get a tax ID number and it is required by US law. Also, any service rendered in exchange for payment (and is not illegal by state laws) is a legitimate business. My father is registered with a tax ID as a 'professional gambler'. Yes, anything that you do full or part time to make a living is concidered a legitimate business as long as the state you practice in does not outlaw it.

Answer 4

You will need to keep about 20% of your money earned out to pay your taxes. Also, be sure and keep very good records of your expenses. You can also use any travel miles and even a portion of your living area as business expenses. Part of your phone bill can be written off also.
I would recommend you getting Turbo Tax to help you as well as the Turbo Tax for your state. You will need to pay quarterly taxes, but Turbo Tax can help you with that too, it will print the necessary forms.
Turbo Tax is very inexpensive compared to the time and headache and possible mistakes you can make doing your own taxes.
Good Luck.

Answer 5

If you are worried about it, go to H&R block, and have them do it for you. It's not that expensive, and it will prevent you from getting audited. You don't need to send in all the receipts, just keep them in your records in case you get audited. You don't need to prove you have a business license on your tax return, and I don't think they care, so don't mention it. They consider it business income regardless of how you make it.

Answer 6

sounds like ya buisness aitn legit