Tax guide for Self employed in Shreveport, LA

Neal’s Accounting &  Tax Specialists in Shreveport, LA are so caring for you  that they have put together this guide to help you understand the fundamentals  of taxation and self-employment in Shreveport, LA

Being self-employed - aka being your own boss - is something an increasing number of Americans have been warming up to in recent years. With a record number of entrepreneurs now running their own businesses or providing services as self-employed individuals, this industry is growing at an unprecedented rate – which is definitely good for the economy.

The only problem when it comes to being self employed is filing your taxes. As most self-employed individuals have confessed, keeping up with tax responsibilities as a self-employed is very difficult. This simple guide crafted Neal’s Accounting & Tax Specialists should help you understand the basics of self-employment tax.

Who is self employed?

The government defines a self-employed person as that who;

• Is in business or carries on a trade as a sole proprietor or an independent contractor. (It is vital that you fully understand the meaning of those two terms.)
• Is in businesses for himself or herself, including on a part-time basis.
• Is a member of a partnership that engages in a trade or a business.

Self-employed tax status

Neal’s Accounting & Tax  Specialists in Shreveport, LA puts emphasis on understanding your tax status as a self-employed contributor. Generally, there are two types of incomes for self-employed taxpayers; income derived from a business you own and income derived as an independent contractor when you work for someone else. Regardless of the income type, the forms you use to file self-employment taxes depend on your status as a business.

The different businesses statuses pertinent to self-employment filers are; sole proprietorship, schedule C-EZ, Limited Liability Company, Single Member LLCs, S-Corporations, C-Corporations, and Partnerships. Irrespective of the category where you fall, you need to have a reputable tax preparer to be doing your taxes and you can trust Neal’s  Accounting & Tax Specialists in Shreveport, LA to do exactly that.

• Sole proprietorship - Most self-employed taxpayers usually fall in the category of Sole Proprietorship  where an individual owns a business that is un-incorporated. An unincorporated business is one that has not been granted corporate status. For such business, liability falls squarely on the owner who is also the sole proprietor.
• Schedule C-EZ - Schedule C-EZ is similar to Schedule C and can be used if your business expenses are less than $5,000, you don’t have any inventory, you have no employees, and you do not intend to use depreciation or deducting the cost of your phone.
• Limited Liability Company (LLC) – LLCs are essentially protected business entities. Such entities are treated in special way by the IRS. Consult your attorney to learn more on LLC prptection.
• Single Member LLCs – if the LLC has only one member who is also the business owner, then it has to choose whether to be treated as a corporation or not, and also whether to be treated as an S-Corporation (see below). For LLCs that choose to be treated as corporations, you will be asked to attach a Schedule C to your federal tax returns. Neal’s Accounting & Tax Specialists in Shreveport, LA will be ready to guide all through the way in making your tax decisions.
• S-Corporations –  S-Corporations are created following state laws. In an S-Corporation, income, losses, and credits are passed down to the shareholder for federal tax purposes. S-Corporations use Form 1120S when filing federal tax returns.
• C-Corporations – a C-Corporation is recognized as a separate tax-paying entity by the IRS. This is different from a sole proprietorship or a partnership and allows such a business entity to take special deductions. But it also means that the profit earned is taxed at the corporate level and then taxed again when it is shared as dividend among shareholders.
• Partnerships –finally, a partnership is where two or more LLCs (or any other business owners) choose to be treated as a partnership. A business entity is only treated as a partnership if each owner contributes in terms of property, money, skills, or labor in exchange for a share of the ownership.

Now that you know your self-employment status, the next step is to get a tax ID number from the IRS website. It takes less than five minutes.

Claiming deductions

Just like other tax payers, self-employed persons can claim multiple deductions on their taxable incomes. Two of the most obvious deductions you should claim are home office and automobile expenses. There are a ton of other deductions that you can claim. Speak with a CPA professional to learn more. Neal’s Accounting & Tax Specialists in Shreveport, LA have the perfect mix of skills in tax preparation and ready to help you.

Other considerations

Finally, being self employed means you’re responsible for both employer and employee shares of social security and Medicare. Additionally, you’re required to report income and losses from real estate, and income and expenses on your farm if you specialize in farming.

You also need to observe filing due dates for the different tax statuses and for estimated taxes. Federal tax returns can be filed either electronically over the internet or manually by filling a form and sending to the tax authorities through mail. Electronically filed taxes are processed faster with refunds often coming in within as little as 10 days.

Summary

Finding a reliable accountant or a competent tax professional can save time and money. If you’re a self-employed taxpayer living in Shreveport,  LA, contact Neal’s Accounting &  Tax Specialist to start discussing your situation.