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 Business, Government, Taxes 
5
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How To Deal With An Aggressive Accountant

For anyone who runs their own business and has hired an accountant (or anyone who has gone to an H&R Block, based on what I’ve heard), you’ll run into someone who will aggressively pursue deductions even if you’ll feel a little uneasy about taking them. Now, it’s hard to figure out whether or not the deduction is legitimate for your situation and each one of us has a different level of tolerance for aggressive deduction taking but Jeanne Fleming and Leonard Schwartz recommend that you simply ask the accountant to explain the reasoning behind the deduction.

I agree with their argument that you shouldn’t accept any of these explanations:

  • The likelihood of an audit is low.
  • Everyone else is doing it. (Seems very grade school-ish of an answer doesn’t it?)
  • The penalties are low if you’re caught.

With the wealth of information on the internet, you can simply shelve the deduction for now and do a little research on it. While nothing online, short of the IRS website, can be a definitive answer, many sites can easily tell you if you should be wary of taking a deduction. You can always email me and I can give you my unfounded opinion or, if you’d like, I can post the question on this site and hopefully someone will be able to steer you in the right direction.

Remember, in the end it’s your neck on the line with your tax return, no matter who actually fills it out, so if you wouldn’t feel comfortable taking a deduction after doing your research, don’t take it.

Source: CNN Money

 Business 
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Is A Home Office Deduction Worth It For Me?

I was reading an article in the WSJ’s Startup Journal about whether or not claiming a home office deduction was worth it, on a case by case basis, and what calculations you’d need to do in order to figure that out. Essentially the trade off is whether the extra time required to document a home office really makes the payoff worthwhile.

Here are essentially my costs for the year (given my home office is ~10%):

  • Electricity: $8/month
  • Insurance: $5/month

I also have the depreciation aspect of the room but in looking at it all, it doesn’t seem worth it for me to go through all that effort and risk the chances of an audit. Most of my expenses have nothing to do with my home and so I can claim them anyway (internet, computer costs, domains, hosting, etc.)

Source: Startup Journal

 Business, Government, Taxes 
10
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Social Security Payments and Self Employment Income

Nickel and I were talking about the social security and he told me that you only have to pay on your first $94,200 of income, which was something we both knew already. For your typical employee, this calculation is very simple and done by your employer, you pay 6.2% of your salary up to $94,200 towards social security. Every dollar you earn after that will not be subjected to social security.

Now, all the literature on the social security website gives you a scenario where the $94,200 is entirely employee income, in which case the answers are cut and try: pay up to $5,840.40, after that you’re home free with respect to social security. They also give you the scenario where the $94,200 is entirely self-employment income, in which case you’re on the hook for both sides (employee and employer) to the tine of 12.4% or $11,680.80.

Now, what happens when you have a mixture of both? If I made $50,000 from my job and $50,000 from self-employment, is social security taken out from the job income and then the double-hit social security taken from the self-employment? Or you do you take the double-hit first from your self-employment? I can’t seem to find any literature on it so if anyone knows and can point me to something “official” I would truly appreciate it!

 Business, Personal Finance 
7
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Paid Reviewing Site Review Me Launched

ReviewMe is another one of those “pay to review something” sites that have begun popping up online recently with the huge popularity of blogging, buzz generation, and the desire by many bloggers to score a little extra dough. Well, I signed up for the mailing to find out when Review Me was going to go live and tonight I received an email.

I’m not entirely sure whether or not I’ll like ReviewMe or writing posts in which I was paid for writing it (though I will always keep my objectivity, if something sucks I’ll tell you it sucks, but I don’t really like badmouthing things) but the way I figure it, I’ll sign up, if something piques my interest then I’ll write about it. If nothing piques my interest, I’ll just let it go.

So far though the blogger administrative interface is pretty easy to navigate (not that many features), which is a huge plus. Within a few minutes I had my blog registered and I was given an offer to be paid to write about ReviewMe (this is a paid post). I honestly have no idea though how to read the system yet to understand how much I’m being paid for this but I figure introducing another stream of income to the community is helpful anyway. This may be an excellent way for younger bloggers, and young site owners in general, to monetize quickly and pay for hosting.

I’m not advocating that you go out and sign up for this as I’ve barely used it (it’s not going on my list of 25+ tips yet) but I think it’s worth at least a look.

 Business, Personal Finance 
15
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This Post Not Sponsored by Interest.com

If you read any personal finance blogs lately, you’ll likely have seen that LAMoneyGuy, Mapgirl, Neville, Make Love Not Debt, and perhaps a few more have Interest.com advertisements all over their site. They’re getting paid for those advertisements and I congratulate them. Some would say that they’re “selling out” or that they’ve given up a little piece of themselves to Interest.com, I say that’s all a bunch of crap. If someone approached me a year ago and offered me enough money to sponsor my blog, leaving me full editorial rights and control, I would’ve probably taken it.

Let’s say you have a $500/mo. deal for one year, that’s a solid $6,000 for absolutely no more work. You don’t need to email people when their advertisements expire, you don’t need to sign up and track any affiliate programs, you don’t need to do anything at all. You just get a direct deposit (or a check) each month, a 1099-MISC at the end of the year, and you can do something else with your life. I made about $2,000 in 2005 from blogging, if someone offered me $500/mo, I would’ve snatched it up in a heartbeat. I’d take the $6,000, grow my blog, and then cut myself a larger deal next time around.

Congratulations to everyone who was able to turn their hobby into a nice chunk of change.

 Business, Credit 
6
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Signing Up For A Discover Business Card

Now that the site generates some income, I have a bona fide “business” and that calls for a business card! My choice right now is the Discover Business card because it offers a 0% Intro APR on purchases for 12 months, which means I can put my MBA classes on it and get 0% for a little while (too bad I just paid for some classes, but there’s always next semester). There, unfortunately, isn’t a 0% balance transfer offer like many other Discover cards but 0% on purchases for 12 months is still a nice perk, especially if you’re just starting a new business.

A few other perks are that I can get 5% cash back on office supplies, 2% on gas (but I’ll be using a Citi Driver’s Edge card for gasoline), and 1% for everything else.

Why would I get a business card when I could just buy stuff with my personal credit card? One reason is that the reporting functionality offered by Discover looks pretty comprehensive and could be valuable come tax time. Secondly, having a “business” credit gives me a little more credence when it comes to tax time because anything that makes you look like you have a business will help. Lastly, getting business credit is difficult and so the earlier I try, the better.

Anyone have any advice about business credit cards or about this Discover card?

 Business, Government, Taxes 
12
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Rules for Home Office Deduction for Businesses

One of the things I’ve learned when running a business is that you should try to take all the business deductions you can and the one that has always scared many business owners is that of the home office. The rules behind taking a home office deduction is quite simple since there are only two but since many folks skirt the line between an official home office and a pseudo home office, they haven’t taken it for fear of an audit. Luckily, the house I own has a whole bunch of rooms that I can’t possibly be utilized at 100% – so my home office really is a home office.


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 Business, Government, Taxes 
14
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Paying Quarterly Estimated Taxes

If you’re an independent contractor or own your own business, paying quarterly estimated taxes is no big deal and something you’ve grown accustomed to. For me, I’ve always worked for The Man (different Man’s, but always for The Man) and so The Man has taken care of this for me, withholding a little more than was necessary for me to cover my tax obligations. Thanks to the popularity of this blog I may have to start paying quarterly estimated taxes depending on how the numbers work out.

Usually, you can get away with not dealing with quarterly estimated taxes if the correct amount is withheld from your regular paycheck. In past years the income from this blog was small enough that the withholding, plus my deductions, still resulted in a small refund. However this year the income increased significantly and surprisingly so I didn’t even think to have payroll over-withhold this year in response.


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