Doubling My Income

Today TaxMama® hears from Idlkotr  in the TaxQuips Forum, with a good question.  “I have the opportunity to be an independent contractor. I am an occupational therapist who will be working with disabled children in their home. Thus, a lot of driving. I will be doubling my income. I do not have a clue how to be an independent contractor and not go to jail for income tax fraud.”

Dear Idlkotr,  

Congratulations. That sounds like a wonderful opportunity.

In the TaxQuips Forum you will find more detail. For this brief TaxQuip, I have outlined my reply:

Make sure you have business licenses for all the towns where you will be working.

Meanwhile, read IRS Publication 334 thoroughly.  It’s a free tax guide for small businesses.

Get a bookkeeping program, to track your income and expenses – especially the out of pocket, cash expenses.  It wouldn’t hurt to get a scanner, for your receipts.

Track your business AND personal mileage. I think FreshBooks and Outright contain a mileage tracker in addition to the bookkeeping element.

Now, you have the ways to track things. If you want to know how to minimize your taxes, too, read Small Business Taxes Made Easy. It will include information the IRS will never tell you.

One last thing. If you’re driving a lot, get a AAA membership. If you have any problems, just give them a call and they’ll get you home.

And remember, you can find answers to all kinds of questions about running a business and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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