Question by Becky H: Personal liability insurance and filing my own taxes for work?
I am interested in a contract therapy job but they require me to carry liability insurance and file my own taxes. Have you ever had to do this? Is it a complete pain in the butt or is it worth it to do them since the job pays very well? Where do I find personal liability insurance and how much would it cost? And how do I pay my own taxes? Should I get a CPA? How much does that cost? I live in Florida.
Oh and I already have another job but this is just for extra money so not worried about them not paying benefits.
Best answer:
Answer by Bobbie
Consulting with an experienced professional about your self employed business would probably be a very smart thing to do.
All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
The independent contractor self employment income will be reported on the schedule C of the 1040 tax form and you will be responsible for the 15.3% of the social security and medicare tax on your net profit from the business operation you also may need to make some quarterly estimated tax payments for the tax year 2010. The last payment would be January 18 2011.
You would have to be sure that you handle your business deductions correctly for your business operation.
For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the IRS.gov website for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
2 of the seven tax tips for starting a business enclosed below.
#4 Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
#7 Visit the Business section of the IRS gov website for resources to assist entrepreneurs with starting and operating a new business. Go to the IRS gov website and use the search box for the below referenced material
*Starting A Business
*Operating A Business
*Closing A Business
*Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)
http://www.irs.gov/
http://access.wa.gov/business/taxes.aspx
Know better? Leave your own answer in the comments!
For the liability insurance, get a couple quotes from local insurance agents.
You’ll file taxes for the contract work on the same return as you file for your regular job, but will add a couple additional forms: schedule C or C-EZ, and schedule SE – not really a big deal. You’ll have to keep track of your income and any associated expenses (like the insurance). You shouldn’t need a CPA. If you have someone do your taxes, it will cost additional to your normal cost, for the additional forms, maybe around $ 100 more, or less than that. If you do your own return already with something like TurboTax, that’ll handle it. If you already do your own just on paper, you should be able to handle this too.
as an independent contract which this will be you will file on sch C and if the ”net’ amount is $ 400 or more you will pay self employment tax, approx. 15.3% of the ‘net’ on Sch SE
and yes, the cost of the insurance required to do the job will be an expense you can deduct on the C
any insurance agent can get you liability insurance