IRS tax issues - the self-employed? Tips on how to avoid IRS tax debt and maintain your independence

Top Issues: There's nothing like the freedom of being your own boss. You do not have to answer to anyone but yourself. But still can not get comfortable. There is still a subject with more authority than you. And this is the IRS. If you make a small mistake, the IRS may close. Problems preventing them is the key to your success.

Reporting of income: the IRS wants a cut of their income, even if you are self-employed. But since you are your own boss, work to get that income in taxes falls on you. Here are the forms you'll need to get started:

-Sole proprietorship: If you own your own business, use the form "Profit or Loss from Business (sole proprietorships)" 1040C

-Earned more than $ 400? Then you are required to submit Form 1040SE "Self-Employment Tax" This module is used to determine the SSI and Medicare taxes

The easiest mistake: It 's extremely important to keep payroll taxes from your employees. Even if it's your first offense and you made an honest mistake, it will be very difficult to convince the IRS that it was an accident. If you have difficulty in retaining the tax, hire an accountant. And there are the banking services that will do the job for you. If the bank makes a mistake, the responsibility will fall to them and not you.

Classifying employees: Things get a little 'difficult here. Who do you classify as employees and that do not classify workers as independent? The distinction is very important. You risk penalties and fines if you do this wrong. Here's a good tip to remember the IRS.

"Under common-law matter, anyone who performs services for you is your employee if you can control what will be done and how it will be done."

Some other factors that show a worker is an employee are:

-Establish set times for the worker

-Requiring the employee to submit reports (oral or written)

-Payment for employees who travel / business expenses

-You take, check and pay for assistants for the worker

Staying Above Water: Keep the IRS off is a tricky business. The IRS is looking closely at your small business. They know that people just starting out are more likely to commit errors. And the people who make mistakes are easy money. Do not let the IRS extort when you're just starting out!

Now You Have The Smoking Gun ... Use it! ......