Presented by:
Cullen G. Williams, CPA
Brian M. Carle, CPA
Jeff P. Russell, Esq.
EMPLOYEE
INDEPENDENT
CONTRACTOR
VS
Receive wages reported on a
W-2
Responsible for ½ FICA
taxes (7.65%)
Receive payments reported
on a 1099-MISC
Responsible for 100% of
FICA taxes (15.3%)
Taxes withheld from
paycheck
No taxes withheld
Responsible to employer
Responsible to self
Uses employer’s tools &
resources
Uses own tools & resources
1099-MISC received does not always mean you have a
business
Profit motive
Level of personal enjoyment
Examples
Mary Kay
Making furniture
Drag racing
Sole Proprietorship
Limited Liability Company (LLC)
S Corporation
C Corporation
Partnership
ORDINARY & NECESSARY
Examples could include, but are
not limited to:
Cost of product sold
Insurances specific to the business
Legal fees for establishing business
Accounting fees for bookkeeping,
planning, and tax preparation
ALLOCATION OF PERSONAL USE
Examples of personal use
items typically include, but are
not limited to:
Automobiles
Cell phones
Computer & internet
Meals
Certain office supplies
Certain travel
Business purpose
Amount spent
Receipt, credit card/bank statement, etc
Cell phone logs
Mileage logs
Repair receipts
Vehicle registrations
Separate bank accounts
Business revenues and expenditures in business
account
Personal revenues and expenditures in personal
account
No Expense Records
Gross Revenue
$
Expenses
30,000
W/Expense Records
$
-
30,000
Difference
$
15,000
15,000
Net Taxable Income
$
30,000
$
15,000
$
(15,000)
Federal Income Tax
$
7,500
$
3,750
$
(3,750)
State Income Tax
2,385
1,193
(1,193)
Social Security & Medicare
4,590
2,295
(2,295)
Total Tax Liability
$
14,475
$
7,238
$
(7,238)
Spreadsheets ( Microsoft Excel) – Sample
income statement posted on the “Resources”
tab of our website
QuickBooks
Apps
Quarterly tax planning
Making estimated tax payments
Set aside money to pay quarterly estimates
Retirement accounts
Health insurance
Cullen G. Williams, CPA
Brian M. Carle, CPA
Williams & Associates, P.A.
11 Debeck Drive
Holden, ME 04429
ph 207-941-9810 EXT 17
f 207-941-9432
CWilliams@waacpas.com
www.waacpas.com
Williams & Associates, P.A.
11 Debeck Drive
Holden, ME 04429
ph 207-941-9810 EXT 16
f 207-941-9432
BCarle@waacpas.com
www.waacpas.com
Jeff P. Russell, Esq
Russell Law, PLLC
16 Sunset Avenue
Hampden, ME 04444
ph 207-735-6361
Jeff@Jeffrusselljd.com
0
