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Old 01-31-2013, 02:31 PM
 
Location: New Orleans, LA
683 posts, read 4,611,551 times
Reputation: 363

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If someone could please point me in the right direction for my situation I would be really grateful...in really plain English as I have generally had really simple taxes for all of my working life and don't know the lingo or anything.

In the last few months I have started doing a few random jobs such as tutoring, babysitting, and making announcements and designing blogs for people. None of these are through an established company, they are just paying me personally by check or cash. I know I can do this up to a certain amount without needing any paperwork, but it is not much (I think it's like $1,500 a year if I'm remembering correctly?)

This year I'd like to step it up a little, which would mean me making more than that minimum amount, and at the end of the year, I'd like to make sure I'm prepared to include the money I've made in my taxes. However, since the people I'm providing services for obviously will not be giving me a w-2, and I'm not exactly starting a business, I need to go another route. Would I be considered a self employed independent contractor?

If not, would anyone be able to tell me what this is considered?


And if I would be considered an independent contractor, here are my questions:

1. What paperwork should I get started with now, and where would I be able to find it?
2. How much money would I be looking at to get started with this?
3. If I were an independent contractor, would I be filing taxes for these things before April 15th annually, or would it be more like three or four times a year?


I'm honestly not even sure what else I should ask, but I'm hoping this is not too complicated. Thanks so much!
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Old 01-31-2013, 03:48 PM
 
Location: The Triad
34,090 posts, read 82,716,942 times
Reputation: 43659
Quote:
Originally Posted by Mel2882 View Post
None of these are through an established company, they are just paying me personally by check or cash.

This year I'd like to step it up a little, which would mean me making more than that minimum amount, and at the end of the year, I'd like to make sure I'm prepared to include the money I've made in my taxes.
The key issues are how much "step it up a little" means and whether the people paying you will be
reporting those amounts (as any sort of business or even a personal deductible expense).

You know the expression "if it ain't broke... don't fix it"?
How about "leave sleeping dogs lie"?
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Old 01-31-2013, 03:58 PM
 
Location: New Orleans, LA
683 posts, read 4,611,551 times
Reputation: 363
Yeah I highly doubt any of these people would be reporting anything, as for each of them it wouldn't be that much. How would it impact me if they did or didn't?

Step it up a little as in, not make it a full time job or even a part time job...but be making more than the minimum. As a ballpark figure, maybe 3 or 4k a year total with all these things. Maybe I shouldn't worry about it, but I want to be honest with my earnings.
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Old 01-31-2013, 08:22 PM
 
23,563 posts, read 70,158,065 times
Reputation: 49102
A CPA would be a place to start. There are some very persuasive reasons to form a subchapter S corporation if this is going to be ongoing or something that might grow.
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Old 02-05-2013, 06:56 AM
 
28,896 posts, read 54,045,943 times
Reputation: 46669
A lot depends on how much money you intend to make. To be frank about matters, most people who get paid in cash never report those earnings. Lots of strippers out there who likely report 10% of their actual income.

If you are going to undertake a more formal business, then you should indeed consider organizing with the advice of a CPA, as Harry mentioned. He recommended a subchapter S. I would offer that an LLC is a slightly less onerous way to go. In both situations, it becomes possible to shelter a lot of your income and take advantages of a lot of deductions that simply would be unavailable to you if you just file as sole proprietor. I work out of my house and I can take all kinds of legitimate business deductions such as my car, internet, a portion of the square footage of my house, etc. etc. As a result of my excellent and law-abiding CPA's dedication to my tax planning, I owed a paltry amount of taxes on revenue exceeding six figures.

However, if you are going to formally organize, be mindful that you will have some minimum expenses such as a franchise fee and pretty good books. If this is not going to be something that you really pursue, then forget it.
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Old 02-05-2013, 08:15 AM
 
Location: Chicagoland
147 posts, read 228,304 times
Reputation: 217
The most simple way would be to write in the total non-taxed income earned. If you want to deduct operating expenses, then use 1099. I don't know too much in-depth other than that.
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Old 02-18-2013, 06:46 AM
 
Location: Florida
251 posts, read 436,022 times
Reputation: 259
Unless you register as a business you won't have to submit anything tax-wise for 2013 until April 15, 2014. Knowing that you will report income next year though you should keep a log of your miles driven to anything even slightly related to work. Of course keep track of any and all expenses as well. I'd pay by credit or debit card for as many things as possible so you can always go back and look them up. Keep receipts for anything to do with cash. Also keep specific notes regarding travel, meals, home office supplies, etc. You'll be surprised at how much you can write off, and I'm not even talking about grey areas like entertainment.

Stop by any tax office for more tips, even a chain like H&R Block. They won't charge you for start up questions like this but they'll probably give you some advice not mentioned here yet. If you like them, go back to them in December to make sure you have everything set for the new year. From next year on you will have to pay quarterly taxes which will be a quarter of what your previous years tax bill was. If sales tax is involved you will need to get a tax ID have to pay what you've collected either monthly or quarterly. If you become a corporation (which so far you do not) you'll then have pay quarterly unemployment tax as well as some sort of salary for yourself. (You'd also need to register your corporation and get a city and county business license). To incorporate a business you'll want the help of an accountant and not just a tax pro.

In the meantime though it's okay to want to report income from your side businesses. It will legitimize you when it comes to applying for loans plus it's the honest thing to do.
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Old 02-18-2013, 01:41 PM
 
Location: Indianapolis
505 posts, read 938,159 times
Reputation: 723
Go to a CPA, and don't take any other business/tax advice on the internet. Some of the answers above (I won't say which ones) are poor advice.
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Old 06-17-2015, 12:04 PM
 
3 posts, read 2,412 times
Reputation: 10
Does anyone know the number to call so I can request a ein # ? (in minnesota)
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Old 06-17-2015, 12:06 PM
 
Location: California side of the Sierras
11,162 posts, read 7,611,258 times
Reputation: 12523
Go here: Apply for an Employer Identification Number (EIN) Online
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