Can Anyone Give Me a Few Suggestions?

hold back a minimum of 25% of all income. Keep ALL receipts from ALL bunsiness purchases. Seperate bank accounts for business and personal. Seperate credit card accounts for business and personal. Call the credit card company in January and ask for a year end summary statement on the business credit card. Do the same for the business checking account. Gather your electric bill, water bill, mortgage papers or rent papers, phone bills for the business line. You can write off a quarter of these bills IF you are running your business out of your home. You can also contact H&R Block or Jackson Hewitt. I have used both and they are both good at finding all kinds of things to deduct.

I am also an independent contractor. I highly recommend working with an accountant. What to hold back and what to file can be very confusing at first and if you don't do it right will end up costing you more in back tax interest to the IRS. Also an accountant can help "translate" all the IRS policies, changes and help you make sure you are paying the right amount of tax. I've had my own business since 2000 and I had an accountant who was not very good at explaining what needed to be done and I ended up having to pay interest on taxes he didn't explain to me. Now I have an accountant who is good at listening and learning about what I do and then applying his knowledge to help me pay what I need to pay and what can be a business expense, etc. Plus having him do my annual tax return for my business is so valuable because my work is time billable, and if I can be working and billing for my time, rather than spending it doing taxes, it's worth it to me.

Hope this helps.

I do not agree with the previous responder, what you can claim in regards to your utility bills depends on the size and use of your house for business.

I do not recommend using a tax preperation service like H&R Block. They are expensive and most not trained very well. All they do is walk step by step through a system and do what it tells them to do. You can do the same thing yourself. Turbotax.com is a very easy site and for about $100 you can use the deluxe version and they have a specific software for in-home daycare.

You do not have to download anything, can use it right from their secure site. It walks you through mini-step by mini-step over each possible deduction and calculates everything for you. When you first set up the home-based business it will ask you if it is an in-home childcare and that is how it knows what specific questions to ask you.

Because you use most of your home for your business calculations are done differently. There is also a daily food expense you can deduct per child or you can save reciepts and deduct that way. Any toy or toddler related movie, furniture, ect that you buy that could relate to your caregiving can be written off.

If you take them to the park in your car you can write off mileage. You do not have to log mileage in a book, but need an oil change or tire rotation done in the beginning and end of the year to prove mileage on the car. Then you can use a % of what you use the car for business. Like maybe 10% or 25%. Again, it calculates all of it for you.

One thing I like about Turbotax.com is that you do not pay until the very, very end when you press the file button. So you can go on now and register, pretend to walk through the software to see all the deductions and get an idea of what you need. (you will have to enter dummy info, but can go back and walk through it again and change it when you have your real numbers)They also have a what to save checklist and a Q&A section!

I would love to answer more Qs if I can. I am not a tax expert, but I did run an in-home daycare for a number of years and did have to do all this myself. I never put back any income, between the deductions and my husband's extra taxes from his job we always came out ok.

There might be a tax expert on here too who could give you some great advise. I dont know that everything I do is correct, I just take the advise turbotax gives me! No problems yet.

GL! ____@____.com

I have an H&R Block 1040 Quickfinder Handbook from 2004, which doesn't do you much good, but it shows some rules for a "Day Care Standard Meal Allowance", "Day Care Business Use of Home" and "Day Care Time/Area Percentages". Schedule C on your 1040 is the form you are going to need to fill out. IRS Publication 587 might be useful for the Business Use of Home deduction. You might want to have an accountant do your taxes at first and then you can probably use that as a reference the next year.

Try the IRS website, they have calculators that help out... along with what is considered a deductible. Also, H&R Block has a great calculator on their website that tells you how much you should hold back for taxes and other great advice...

http://www.hrblock.com/taxes/tax_calculators/index.html

I am also self employed. The advise I would give is to use an accountant. It cost money but there is so much involved other than just paying income taxes. If your business/service is taxable you will need to charge sales tax and file that every quarter or monthly. I am a graphic designer and my services are taxable. Even mowing lawns are a taxable service. Yours may not be. You can call the state comptroller to find out if your business is or not. Because you are self employed you will need to pay social security and other taxes that are usually paid by the employer. This is where an accountant definitely comes in handy. For your car expense I believe you can either deduct the millage or the wear and tear, but not both. If anything, use an accountant in the beginning so you can learn what is and isn't deductible for your type of business. The last thing you want is to be audited and have to fork up a bunch of back taxes. Good luck. Let me know if you have any questions.

One more thing - I pay "estimated" taxes every quarter. It is based off of the previous years earning. Something you might need to do next year. I have missed a quarterly payment in the past and was penalized for it. This is something else to ask an accountant.