Some Rules for Achieving Business Independence

Henry Sanders, CPA
Special to the Mirror

How would your like your office to be ten feet away from your living room?
   These days more and more people are opting to go into business for themselves. Computers, FAX machines, e-mail can easily fit into a comparatively small space so that where you are is no longer critical to running your business. People who would rather work for themselves than someone else are becoming independent contractors. But they must meet certain requirements to qualify.
   Independent is the key word. As a general rule, the independent contractor cannot be under the control, supervision or direction of a particular individual. You must have a business license.
   Business cards and stationary with your name on them is evidence of self-employment. Your own workman’s compensation policy is a requirement should you be injured while performing your duties on a customer/client’s premises.
   There are certain tax advantages to being self-employed: home office deductions, use of auto while conducting business _personal use of auto is not deductible), setting up your own retirement program, which may be better than a regular or Roth IRA, depreciation of your business equipment (under certain circumstances 100% of the cost of your equipment can be deducted in full) in the year you acquired it).
   There is a tendency , when you start your own business, to charge as little as possible for your services, but, when you set your prices, remember you have overhead expenses that must be covered, such as auto, telephone, supplies, insurance, equipment costs, licenses, advertising, and so on.
   Prepare a budget for business and personal expenses, adding a profit margin, to determine how much to charge for your services.
   Bill for your services upon completion and collect within a reasonable time. Being your own boss can be very gratifying. Although it can sometimes can be frustrating, the rewards are worth it.