As all of you should know bc you read the Business Forum everyday , I'm in business for myself. Basically, I'm an Independent Contractor. My job requires me to have a truck to haul my products around. Up until a week ago, I was borrowing my brother's truck. Needless to say, that's no longer an option. So now I'm SOL without a truck. My question is: Would I be able to purchase a truck and write it off on my taxes as a business expense? I'm not sure how that works, esp with me being an Independent Contractor (no taxes or paperwork). Just trying to figure out the best approach here. Thanks in advance.
I think you can but I'm not a tax expert. My logic is this. Anything you use for your own business should be able to be written off.
I was thinking that too. But I work as an IC so I don't know if that still applies. Approx how much I would be getting back on it is also something I'd want to know ahead of time.
Right, which I believe would make me SOL in regards to a write-off. Idk if I should try to register or if I'm better off staying independent.
I think you may be right about being SOL in regards to a write off.. but i did find this. might help? http://answers.yahoo.com/question/index?qid=20071128124632AAoIYIj
I read that too. I duno if the state laws are different in these areas. But, I'm in NY if it matters. I think I need to talk to a tax expert.
Hell yes, you can write it off. That's a perfectly legitimate business expense, which you can write off on your taxes, or alternately, depreciate the value over several years. To be deducted on your taxes, it has to be a truck solely for business use, but you can deduct mileage, gas, tolls, meals, etc. that are part of your business travel. The fact that you're an independent contractor means that you purchase your own materials, provide your own insurance and such, right? So why would that hinder your ability to write off a legitimate business expense? As long as you're tracking expenses and paying taxes, you can write off whatever expenses are legitimate, and a truck most certainly is. You should consult with an accountant to assist you in deciding how best to handle your tax issues; that's a MUST for any independent businessperson, but you can definitely declare the truck as an expense, and deduct accordingly.
Slick, for what its worth, I would STRONGLY suggest obtaining a small business license if you haven't done so already I went that route for awhile and the annual cost in New Mexico at the time was silly it was so low. It entitles you to several tax structures and opens up avenues ie Licensing and such Also, I would listen to Phil (Phunwin) as I have a feeling he understands the laws pretty well and I believe he is also in NY
Any idea if I'd be better off as a sole proprietor instead of an independent contractor? At least tax-wise?
I don't know about taxwise and I am not positive how it is in NY, but depending on the type of work you are doing, you could possibly paint yourself into a corner if you derclare as a Sole Proprieter. That is you could actually limit yourself to both the type of tasks performed as well as where they are performed Once again, I would point you towards your local Small Business Berau. They could readily supply many answers
I agree, I had my own contracting business a few years ago and it's best to stay legit and make sure that you have a business license. It's a small fee, less than $50 at least when I got mine years ago. Slick, you can contact your local chamber of commerce or small business administration for more info and they can tell you everything that you'll need.
Exactly, I remember paying I think 50 a year Of course there are a few stipulations, like you can't be raking in millions, and you can only have like 3 employees working for you at one time, but it keeps everything legit and you do get to cut some corners in places.
Not sure what else business insurance would cover? (bankruptcy maybe?) But I'm almost positive that stolen merchandise/equipment is a tax write-off as well.
Well put it this way, if you (or someone that you hire) are carrying a sheet of OSB through someone's home and you accidentally knock a very expensive vase onto the floor, instead of paying for it out of your own pocket your insurance should cover it. No matter how careful you are, accidents still happen and it would suck a bag of balls if you or an employee were to back your truck into a porch and be responsible for paying for the damages out of pocket. Depending on who you have working for you and how big of an operation you have, you may also look into providing health insurance for your folks, though that can get extremely pricey and who knows what things will look like a few months from now.
I don't think the two are mutually exclusive. When you're talking about being a sole proprietor, it's a form of business organization, not your status as an employee/employer. An independent contractor is someone who works for himself. A sole proprietor is someone who has no business partners. I would strongly consider organizing your business as a corporation, most likely an LLC. As a sole proprietor, if you get sued, they can come after you personally. As a corporation, if you get sued, they can only take your business assets. It's more paperwork and extra legal and accounting fees, but I believe it's worth it. BTW, as Kenny notes, yes, I'm an attorney, and in fact, I've also taught business law at a community college for several years. But, my advice is no substitute for consulting with your own attorney or accountant.
FYI, you can't write off the entire cost of the vehicle in one year. As a business vehicle, van or truck, you are limited in 2009 to a max of $3,060 deduction (as the tax law currently allows, this could change by the end of the year). The deduction is lowered if not 100% used in your business. I would not recommend forming an LLC until your business is profitable. Here in California, there is an annual LLC fee of $800. This is payable by the due date of the tax return whether you made money or not. And the tax return prep fee would cost you as well.
Yea if it's $800 a year for the LLC, that'd be a rough way to start. Reason being that business takes a pretty good hit once the weather turns. And if you live anywhere near NY, you can already see the weather blows right now.
Thanks again for all the help guys. I have an appointment with my Small Business Development Center on the 5th. Until then I'm just going to try to get all my paperwork ready and continue game-planning.