How Long Should I Keep Records

As a question that comes up constantly, these are the definitions per the IRS which will hopefully clarify questions you may have.

The period of limitations is the time in which you as the taxpayer can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.  Unless otherwise noted, the years refer to the period after the return was filed.  Returns filed before the due date are treated as filed on the due date.  Also note that you should retain copies of your previously filed tax returns.  They help in preparing future returns and make computations if you need to file an amended return.

1. If you owe additional tax and situations (2), (3), and (4), below, do not apply to you, keep records for 3 years.

2. If you do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years. Read the rest of this entry »

The Greater Economic Picture – how does it affect you?

As a child in the 1970s, I felt like I was living on the edge of a green pasture. The baby boomers were piled ahead of me and it was a time of profound economic growth. I walked past schools that were overflowing with portable units to manage the crowds, but by the time it came for me to enrol in them, they were closing down from the lack of enrolment. I realized that we live in a financial environment the way animals live in a habitat, and that it affects us on a very personal level.

Economic growth that happened during my toddlerhood had given way to inflation that marked my childhood, the way a big parade leaves a trail of garbage in its wake. When you’re tagging along at the tail end, you know there’s been a big party ahead of you, but all you cansee is litter and the clean up crews. It was a bit like growing up in the line up for an amusement park that had, just that minute, declared itself full to capacity and pulled the rope across the door just as you got to the front of the line.

I am the demographic leading edge of Gen X, and have found this has had a huge impact on me financially. As a child, I grew up in a sense of wealth and rising prospects, but also profound inflation and a confusion about what things were fundamentally worth. As a teen, I entered the workforce into an economy undergoing the flood of young adults into the labour market. Younger, and with less experience, I couldn’t find jobs. Anywhere. I spent my summers at the beach and couldn’t decide if I was lazy or lucky. I redirected back into school because I wanted to be a professor, but by the time I graduated from my B.A. there were already hiring freezes in universities across Canada. Read the rest of this entry »

Comfortable in Your Own Skin Podcast with Julie Roads

Last month I had another of my podcast interviews and this time with Julie Roads of Writing Roads, LLC.   Julie is a professional marketing copywriter, speaker/workshopper and consultant with a specialty in web & blog writing and activating social media authentically to grow any business.  I first met Julie online, most likely through my writings here at Queercents. As I got to know her work more I was thrilled to get a chance to sit down and talk with her one-on-one about what it takes to be successful as a self-employed writer.

In our time together Julie shares a lot of great tips for all aspiring writers and freelancers.  She also talks about the joys and challenges of raising her kids with her wife.  Julie is a social media expert with a knack of building community online so you’ll want to check out her musings on Twitter as well.

Head on over to listen to the comfortable in your own skin podcast with Julie Roads.

Paula Gregorowicz, owner of The Paula G. Company, offers life and business coaching for lesbians to help you gain the clarity, confidence, and courage you need to have success on your own terms. Get the free eCourse “5 Steps to Turn Fear Into Freedom” at her website

Take a pass at a short, short task.

For my articles at The Advocate, I’m always looking for interesting sites or services to write about that are related to personal finance. So when I learned about through this post at Gay List Daily, I decided to take a look:

The newest tool in the fight against unemployment is… All jobs listed on the site are short term, temporary positions or tasks that pay in small amounts, but can really add up if you’ve got a knack for freelancing. Some are rather menial (adding websites to search engines) and some perhaps unethical (adding positive reviews to product list sites), but, as most sites we frequent, there are a few diamonds in the buff.

With a little extra money from the random data entry or research gig, we can once again rev up our engines with that debilitating and fiscally draining vice – our daily Starbucks addiction.

Sounds interesting, right? That is until you start looking at what the “tasks” pay. Many of the listings I observed pay a whopping $0.05 to $0.20 per task. Read the rest of this entry »

4 requirements for the home office deduction

If you use a portion of your home for business purposes, the option of a home office deduction is available meeting specific requirements as stated by the IRS.

1. The area in your home must be your principle where conduct your business and not used for ANY other purpose.

2. You see clients, patients, customers, etc. during your normal business hours at this location.  The location doesn’t have to be a separate building but must be used in connection with your business.

3. You utilize the location for storing inventory, product samples, etc.

4. The location is used as a rental property, home day care facility, etc.

How do you claim your home office deduction? It’s all based upon the percentage of the home that you use for business purposes only.  Also your deduction is limited if your gross income from the business is less than your total business expenses.  Such expenses that are available for deduction include: utilities, property taxes, and dedicated telephone line(s) which can be deducted at 100%. Read the rest of this entry »

5 Tips on What to Check with New Customers

I’ve learned to be very very careful when working with new customers.  The point is that when times are tough, it gets tougher to be paid.  People are always trying to talk down your price, nickel and dime you, and then rarely gets to a point where a client fails to pay you and you either have to take them to small claims court or file a 1099-C with the IRS.  Here are some tips to consider when evaluating your new customers.

1.    There are numerous credit reference checks available on-line, which is the best way of finding one that you want and modify it in the form that fits your needs.  However, a key portion of that form should be that the vendor provides at least three vendors that you WILL contact and they agree to you being able to contact them inquiring about their payment history.

2.    Find out what from these reference checks, is their payment history, how often do they purchase from the vendor, and a general range spent.  If they are buying once every 6 months and spending only a few hundred dollars, this is not a great representation even if they pay them within 30 days.

3.    Are these potential “buddies” of the business owner who will say anything on your potential customer’s behalf?  Try to speak directly with the accounting person, as they often have no ties to the buddy system and they are going to give you a more accurate reading of how they pay their bills. Read the rest of this entry »

Can an S corporation save me money?

With the economy in the doldrums, many folks are starting businesses to bring in a little side money. If you decide this is for you, there are a few important steps to take in forming your new venture.

I’ve written before about the importance of forming a limited liability company (LLC) to protect your personal assets. Today, I’d like to discuss the advantages (and disadvantages) of forming an S corporation.

Self-employment tax

Whenever you earn money not as an employee, you owe self-employment tax, in addition to income tax. It doesn’t matter whether you’ve formally incorporated, filed as an LLC, or are just going door-to-door peddling homemade soap; it’s income, and you need to pay Uncle Sam his share. The self-employment tax is 15.3% of income (revenue less expenses), which is a hefty bite. Unlike income tax, the self-employment tax rate is fixed — not progressive — the smallest street vendor pays the same rate as a high-end attorney.

Self-employment tax pays for Social Security (12.4% — up to the first $106,800 (2009)) and Medicare (2.9% — no income limit). If you are an employee, you and your employer each pay half of this amount; as a self-employed person, you get to pay it all. Read the rest of this entry »

What is Your Follow Up Strategy?

So, you’ve gone to a networking event, (or like me, just gotten home from BlogHer ’09), and now you have a pile of business cards and new contacts. What do you do next? It can sometimes be a little overwhelming but follow up is a critical element in making the most of new connections you make.

Have you ever left a powerful event feeling all inspired and excited about the wonderful people you met? Then, you went home and absolutely nothing happened. Life got in the way, you were backlogged on emails from being out of town, or you suddenly had projects on deadline. Either way, the connections and event become a distant memory and opportunities go by the wayside. It is a sad reality for so many. As people we really do want to help one another and cherish the connections we’ve made but somehow it slips away.

It doesn’t have to be that way. Have a follow up strategy in place before you go to an event (and it helps to have one in place at all times for that matter) and then execute when you get home. Larina Kase calls this networking issue #3 in her post “Is Networking a Waste of Time?”. The solution she offers:

Only attend if you can commit to following up. Schedule follow-up time on your calendar before you even arrive at the event. Adopt a less is more mentality. It’s often better to meet fewer, higher-quality contacts than to leave with a stack of business cards. Don’t count on others to follow-up. Make it your responsibility.

Now remember I said strategy for follow up not cookie-cutter crapola. Read the rest of this entry »

Is Your Hobby Really a Business?

Most all businesses were hobbies at one point or another, but the question becomes where does it draw the line?  According to the IRS. Section 183 (the hobby loss rule) limits the amount of of deductions when an activity is not engaged in for profit.  Yes there is a distinct difference between the two, and this will hopefully explain it what you can deduct as a hobby expense.

Specifically, ask yourself these questions provided by the IRS:

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Do you depend on income from the activity?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Have you changed methods of operation to improve profitability?
  • Do you have the knowledge needed to carry on the activity as a successful business?
  • Have you made a profit in similar activities in the past?
  • Does the activity make a profit in some years? Read the rest of this entry »

Freelancers: Are you experiencing a Self-Employed Depression?

The phenomenon of a Self-Employed Depression was written about recently in The New York Times Magazine. Emily Bazelon coined the term as she described the effects of the recession on solo practitioners in NYC. In the current economy, she asks the question, “What happened to all those liberated, self-reliant, self-branded free agents?”

Bazelon’s story focused on one yoga instructor who sent her an email message that said, “I don’t know how I will make it through the summer.” The bottom of the note read, “Sent from my iPhone.”

The call of semidesperation via a high-tech status symbol is an emblem of the gap between the past and the present for many of urban America’s self-employed. Freelancers still have the trappings of middle-class entrepreneurship. But the downturn is eating away at their livelihoods and the identity they thought they chose when they decided to work for themselves.

Livelihood and identity often go hand-in-hand. According to the Bureau of Labor Statistics, the estimated amount of self-employed workers in the US was 9 million in 2005. And now with corporate layoffs and out of work professionals adopting the freelance mindset, it’s likely that the self-employed pool of workers is deeper than it was even a few years ago. That’s a lot of self-employed competition. Read the rest of this entry »