APRIL 6, 2009
ISSN 1947-105X | Vol. 3, No. 14

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BUSINESS MANAGEMENT ISSUE

In This Issue:

• From the Editor
• FEATURE ARTICLE: Self-Employment Taxes & Saving
• TELESEMINAR: Take Charge of the Delegation Process
• Marketplace
• Find a Qualified Virtual Assistant Today
• About the VACOC

From the Editor

With tax season upon us in the U.S., I thought it might be handy to go over some tips and tricks for saving and making sure you aren't scrambling to cover self-employment taxes each year.

Yours in goodness and success!

Danielle Keister
Founder & CVO Virtual Assistance Chamber of Commerce

- FEATURE ARTICLE -

Self-Employment Taxes & Saving

Let me state right off the bat that I'm not an accountant or financial expert. If you're a business owner, making sure you have one of those professional advisors on your team is a must. However, if you don't yet have any kind of financial advisor in place, this article covers some simple tips and tricks for helping ensure your bases are covered when it comes to self-employment taxes and saving.

The information in this article is U.S.-centric, but countries such as Canada, the U.K., and Australia have similar obligations. Be sure and check with your own accountant and governing agencies for the most accurate info relative to your location. First, let's cover some basic information from the IRS:

What are self-employment taxes? In the U.S., every business must pay taxes. For sole proprietors, independent contractors and other self-employed individuals, Self-employment tax (SE tax) is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of employees.

How much is self-employment tax? The self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare). This means that for every dollar of income you earn, 15.3% of it must be set aside for self-employment taxes. All of your combined income is subject to this tax (exception: only up to the first $102,000 is subject to the 12.4% Social Security part of the tax).

When do I pay self-employment taxes? You must pay the tax as you earn or receive income during the year. You generally have to make estimated SE tax payments if you expect to owe tax of $1,000 or more when you file your return. Self-employed business owners must make estimated tax payments by these dates:

What other taxes do I need to save for? That's going to depend on where you live. For example, besides the federal self-employment tax, your state might also have its own income tax. This is why it's so important to have an accountant you work with regularly. This kind of advisor can tell you what all of your taxing authorities are and help you come up with a percentage figure to safely cover your tax obligations.

How do I set aside these monies? Again, working with an accountant or other financial advisor is going to be worth its weight in gold. They can help you come up with a budget and schedule for making sure all your tax obligations are met so that you aren't scrambling come tax time each quarter. In the meantime, here are some ideas to help ensure you're covered:

• Keep a separate business account (both checking and savings) so that you aren't co-mingling personal and business finances. Not only is this a legal requirement in certain instances, but it will also make tracking and saving much easier.
  
  
• Every time income comes into the business, transfer at least 15.3% to the business savings account to cover self-employment taxes. If you have a state income tax, add on whatever that percentage rate is.
  
  
• If you have very frequent or daily income transactions, it may be more practical to simply run an income report at the end of each month and then calculate and set aside the self-employment percentage on the total.

Other Saving Tips

• Do you have monthly business expenses? Total these up and keep a minimum of that amount in your business checking each month. Set them up to pay automatically either through Bill Pay or auto-withdrawal.
  
  
• Is there business or skills training you want to invest in? To create a fund for professional development activities throughout the year, set aside a small percentage of income each month to devote to that.
  
  
• Is there equipment or software you want to purchase? If you need to save for an expensive business purchase, start setting aside between 1%-20% of your income each month (depending on how fast you want to reach your goal).
  
  
• Get an ING Direct account. ING Direct is FDIC insured, earns higher interest than a regular checking/savings account, and allows you to set up special sub-accounts to easily track your different savings categories.

RESOURCE: For complete, current information on U.S. self-employment taxes, be sure and visit the IRS website. Of particular interest, Self-Employment Tax and Estimated Taxes.

About the Author: Danielle Keister is a business advisor, innovator and thought leader in the Virtual Assistance profession. A veteran Virtual Assistant of 12+ years, her logical, no-nonsense approach to business development has gained her recognition as one of the leaders in the field. She loves what she does and is passionate about sharing her knowledge and know-how with the world. She’s all about inspiring others to reach for their highest excellence. When not taking care of clients in her own Virtual Assistant practice, The Relief Virtual Assistance, she is busy leading the Virtual Assistance Chamber of Commerce.

© Copyright 2009, The Portable Business™. All U.S. and International rights reserved. You are granted permission to republish this article only if used in its entirety with this copyright notice, title, article content, resource, author's bio and links left intact.

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Reader Raves

"Hey, I love getting your newsletter and I'm not even a VA!"

— Tom Mullooly, 401kExpert.
(Editor: Thanks, Tom! In fact, our ezine is written for business owners in mind, not other VAs, so your words mean a lot!)

Hey! Send us your feedback. Did you find an article insightful, helpful and informative? Have topic ideas you'd like to see covered in future issues? Let us know! We'd love to hear from you.

No-Cost Teleseminar: Take Charge of the Delegation Process (and Make More Money, Too!)

Many clients (maybe even most) struggle when it comes to delegation. When they hire a Virtual Assistant, they expect her to be the expert and to guide them in this process. But many Virtual Assistants aren't taking that proactive, professional role in their own businesses. In the process, not only are they creating a burden on their own clients and not supporting them as fully and professionally as they could, but they are also missing out on opportunities to make more money.

If you are a Virtual Assistant, join us for this special, no-cost session on Thursday, April 16, for the next VACOC Guest Expert Teleseminar: "Take Charge of the Delegation Process (and Make More Money, Too!)" with Danielle Keister, Virtual Assistant business expert and founder of the Virtual Assistance Chamber of Commerce.

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ABOUT THE VACOC: Founded by industry veteran Danielle Keister in 2006, the Virtual Assistance Chamber of Commerce™ is the Virtual Assistant professional association specifically for solopreneurs. Our passion is helping Virtual Assistants run smarter, more successful businesses that bring them more money and greater personal happiness, freedom and client satisfaction.

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