Create Your 1099 Invoice Template for Supervision Effortlessly

1099 invoice template for Supervision

as an independent contractor it's important to understand that when it comes to taxation you're going to be taxed one or two ways you're either taxed as a W-2 employee or you're taxed as a business owner you might not be thinking you're a business owner because maybe you don't have a business license maybe you don't have a formal entity maybe you don't have a separate bank account but for tax purposes you're going to be considered a business owner and if you're not thinking like that you're going to give your 1099 to your tax professional and they're just going to report your income therefore you're going to have a higher tax bill but when you stop and think about the fact that you are a business owner you know what goes along with being a business owner business tax deduction that's right just because you are classified as an independent contractor with whomever you're doing work for when it comes to tax purposes it's time to put on your business owner hat and that means I want you to think about the deductions that you can take for example you can be looking at your car expenses do you ever have to go out and purchase anything for that business if so you want to make sure you're taking your car deductions if you're operating from home and you're using your home office you're using your internet you're using your utilities those are all tax deductions for you to be able to write off against that income because the key is you want to report all the income but you want to be able to take tax deduction to lower the income to get you the net profit because as an independent contractor that business income is going to be subject to self-employment tax what I see in my practice is most people that are classified as independent contractors get plummeted with taxes because they're not expecting to pay self-employment tax on top of income tax let me give you an example let's say you make ten thousand dollars as an independent contractor and it's just a straight ten thousand without any deductions you're going to be hit with 15.3 percent Social Security and Medicare that right there is going to be 1530 dollars that you're going to pay on top of the income taxes on that ten thousand dollars so when you're able to take tax deductions against that ten thousand dollars right off your car perhaps that's a thousand right off the use of your home office perhaps that's another thousand we've now taken ten thousand we've dropped it by a thousand for the car a thousand for the home office we've gotten the ten thousand down to eight thousand and it goes on and on from there depending on the other expenses that you could add to it like I'm certain you're using your cell phone to talk to whomever you're doing business with perhaps you have software Zoom Microsoft Office who knows but those are all deductions that you want to take against that income to lower your overall tax bill so it's important as an independent contractor I want you to think like a business owner so that you can reduce your tax bill keep more your cash in your pocket and keep Uncle Sam out of your pocket that is so important and you also might want to consider opening up a separate bank account purely for the money you earn as an independent contractor why do I say that to you because you don't want to co-mingle funds you are in essence a business owner you want to have your personal income over here and your business income separated and the reason why you want to separate it is because when it comes to your tax deductions you want to maximize those deductions you want to be able to prove to IRS that I have a separate bank account set up I take all of my business expenses through my separate bank account and I take my personal expenses through my personal bank account being able to classify yourself as a true business owner when it comes to tax purposes is really going to lower your overall tax bill and here's the thing I want to make sure that you are educated and you know the difference because reporting straight 1099 income is going to really Crush you from a tax perspective but actually classifying yourself rightfully so as a business owner is going to minimize your taxes and I want you to also understand you don't have to have a business license you don't have to be a formal entity set up if you receive any income that you're earning outside of a W-2 you are a business owner and understanding that is going to be very helpful when it comes tax time so when you know better you actually will do better which is why I want you to like comment and subscribe so I can can continue to educate you on all things taxed