Rice Business Report April Rice Business Report 2019 | Page 20

RICE BUSINESS REPORT APRIL 2019
Tips for Independent Contractors and Self-Employed People on Filing Annual Taxes
By KiKi Canniff
Anyone who works for themselves is considered self-employed by the IRS and
required to file a Schedule C tax return on all income they receive. That in-
cludes everyone from someone already receiving social security who is paid in
cash for mowing neighborhood lawns to the person who takes in money
through sales, the carpet layer contracting with local stores for installation
work and any others who bring in income. Some people even need to file more
than one Schedule C
The secret to making a business work for you lies in keeping receipts for every penny spent so that you
can offset that income, and filing properly. Most independent contractors don't have the time to do reg-
ular monthly bookkeeping so they're stuck trying to organize everything when they tackle that disor-
ganized pile of receipts at the end of the year. And if you know the IRS rules for your industry that can
be enough, but you need to know what is considered normal for your industry
Although it's easy to find someone to prepare a Schedule C small business tax return for you, unless you
know exactly what the IRS expects of a self-employed person that tax return will not be accurate and
you'll never get every tax deduction allowed
Surviving a tax audit is very easy with organized records. Independent contractors will want to start by
following these four simple rules:
Never mix business income with personal income and expenses. The IRS can disallow otherwise worthy
deductions if you mix them with personal business so always deposit all business income into a separate
bank account.
Keep a detailed diary of all business miles, especially if you use a vehicle also for personal miles. This is
required in order to take the mileage deduction which is often a big one for independent contractors.
When deducting meals you must write the names of everyone at that meal, as well as the business dis-
cussed, on the receipt. Don't forget the tip.
Those who make or buy items for resale are required to track their inventory for IRS purposes.
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