TAXES- going to be working for myself soon- in WI

[GameFreak]

I am going from being an employee to renting a massage room. I am going to be a sole proprietor. I am also going to be retailing some items, and have applied for a seller's permit.

I was wondering if anyone had suggestions for books to read, or online sources for what I can and cannot deduct?
Suggestions for tax software?
What tax forms will I need? W- what? W-4?

Thanks for any input

 

[dbraunofva]

I went to the IRS website and found this so far

http://www.irs.gov/businesses/small/article/0,,id=98202,00.html

 

[Pompal 09.]

There are few no-matter-what's when you work for yourself, but this is one of them: get a good CPA, and never skimp! If they're good, they'll save you much more than you pay them (but pay them well). Also, get used to saving all your receipts--even if you don't THINK you'll be able to write something off, toss it in a manilla envelope anyway, labeled "2007 receipts" and sort it out later. You never know what you'll learn as time passes, and you'd hate to throw something away that you could've used to save yourself money!

What you can write off? Here's what I write off (not an exhaustive list, but just some examples) : the square fooeforum.xxxe (and the appropriate utility ratio) devoted to client space, the computers & printers & software, all office supplies, related vehicle mileage, CDs, oils, sheets, all massage clothing, pamphlets, charts, CEUs, textbooks and other industry-related books, incense, candles, bolsters, pillows, (don't forget your table, your stereo, or your chair if you do chair massage!), credit card machine, website expenses (building, maintaining, domain registration, email services, Constant Contact-type services, etc). And don't forget entertainment and eating out expenses, too. (I also write off healthcare expenses, like dental work, chiropractic, massage therapy, and vitamin supplements my chiropractor prescribes.)

I skip the software. It doesn't compare to a real live expert who becomes familiar with the in's and out's of your individual situation, and it might overlook something!

Tax forms: no W-anything! You'll probably file a 1040 (not the EZ form, though) and a Schedule C for self-employement. If you're an independent contractor, the facility you work in will furnish you a 1099 by the end of January. If you're actually your own one-person show, there's no 1099.

Good luck!! You can do it!
Hugs,
~Jyoti

 

[TK-421]

jyoti, Thanks so much for this info

 

[Katie B]

Hi moose-goose. I use an accountant. To save $$$ I save all my receipts IF I ever get audited, but instead of giving them to the accounatnt to sort them out, I keep track of my expenses in an Excel spreadsheet. Date, how much, what item it was (sheets, CD etc.), where I bought it, category (fixed assets, supplies etc.) and payment method (cash, check, Visa). My accountant likes it and I don't have to pay for his time to go thru the receipts.
I have several spreadsheets. Expenses, Mileage, Meals etc.

 

[raised by chimpz!!!]

Hi moose-goose. I use an accountant. To save $$$ I save all my receipts IF I ever get audited, but instead of giving them to the accounatnt to sort them out, I keep track of my expenses in an Excel spreadsheet. Date, how much, what item it was (sheets, CD etc.), where I bought it, category (fixed assets, supplies etc.) and payment method (cash, check, Visa). My accountant likes it and I don't have to pay for his time to go thru the receipts.
I have several spreadsheets. Expenses, Mileage, Meals etc.

Thanks for your help

 

[Morgan]

I do what Anastasia does. I pay under $100 at tax time, but have the accountant fill out the forms and file for me. I give her all the info and keep my book through the year, and keep all receipts. Mine are in envelopes sorted by month, and I just enter the info and file as I make purchases/payments. Though occasionally I get behind and have to play catch up, it is not hard to stay on top of. I just get lazy, I guess.

 

[Rohn]

I talked to my boyfriend's father, who works for the IRS in WI. Many things I was told were tax deductible by other MTs are not according to HIS boss. Clothing is not, unless you work in health care and must wear scrubs. Pedicures are not (I do ashiatsu and soft feet with trimmed nails are extremely important!). Computers are deductible depending on how much time is spent doing work-related stuff compared to anything else. So if you have a computer that is ONLY for work, you can deduct 100%. If it's also your home computer, you need to figure out how much time is personal and how much is work and deduct accordingly. If you get audited, they will ask. I'm not sure about healthcare costs - I'll have to ask. You can use entertainment/dining, but if you're audited, they'll most likely ask you why you'd have expenses like that, and as a massage therapist it may raise some red flags. (I'm just telling you the info that was passed down to me by someone fairly high up within the IRS.)

I have an MT friend who listed off a bunch of items that her accountant was using as a deduction for her, which, according to my boyfriend's dad, are definitely not ok to use as a deduction. Just because your accountant says it's ok, doesn't necessarily mean it really is. Unfortunately you can't plead ignorance if you get audited.

What a pain.

If anyone comes across a list of what IS acceptable (especially in WI), please let us know... I'm curious too...

 

[suszcza]

The reason nail care is not expensable is it also can masquerade as every day personal care expenses. YOu have to show something is 100% for business reasons in order to survive an audit.

There is a lot of misinformation out there - even in accounting circles - about what is deductible or not.

You are better off asking a CPA to set up a chart of accounts for you, and some guidelines for what to include in each to make things easier.

While the advise here is often good, when it comes to taxes, take your advise from someone who will show up at your audit, should it ever come to that.

 

[Vishak]

I do Ashiatsu, too, and I was able to write off a pedicure before my class b/c it was a class requirement. They said they'd send us home w/o a pedicure. Normally I do my own pedis and manis(I am very handy) so I did not know we couldn't do that.

Also, if I take a class and I need to experience the new modality, I get a session. I did it for Ashiatsu and Thai massage and I was able to write it off as well as a part of the class.

I also wrote off my Ashi wear as advertisement (it has an Ashiatsu logo). Same with my business T shirts.

I wasn't able to write off a gym membership even though I found a lot of clients there.

My accountant is pretty strict but better safe than sorry.

 

[My_Babies_Mommy]

Anastasia, your deductions make sense. The other MT who was listing off all sorts of things her accountant uses as a deduction for her included *any* clothes that she wears while giving massages (comfy pants, tennis shoes, etc.), hair cuts ("because we need to have a professional appearance"), manicures (can't be scratching and poking people!), etc.

R&R is right in that you need to show that something is for business reasons in order to survive an audit. I just wish there were some general guidelines for people in our profession. Talking to my boyfriend's dad, it seems as if they can get INCREDIBLY nit-picky during an audit, so you're right - better to be safe than sorry.

 

[swingswingx3]

When I worked at a bank years ago a coworker made a comment that the IRS should allow women to write off pantyhose as it's a required "accessory" and we go through so many pairs.
Being an MT now I wish they'd let us write off clothes! Fat chance. I wrecked so many pants and shirts - I somehow manage to get oil splatters on them and they don't always come off or trying to get it off with dish soap leaves a stain. And I wear an apron as well.