Strange Tax question for newbie

Posted by Richard Mezerik 
Richard Mezerik
Strange Tax question for newbie
June 13, 2005 07:58PM
Hello FCP Users,

Love the site. I am a beginner in the world of freelance editing. I currenlty freelance for a company in Burbank. I take out 30% of all of my checks to pay for my self employment tax as well as my federal tax. I recently did a video for a not for profit company. I as well as the director and producer worked pro-bono on the job. We made out an invoice in the ammount of $1850. All of this went to camera rentals, post-production time, food, lights, microphones, etc. The president of the company is about to write me a check for $1850. Since I am not being paid for my services, only my equipment, do I have to still take out 30% of this check for the government ?

to my knowledge, all that can be written off. but only if you do it properly and only to a point. keep accurate books and for the love of GOD - GET AN ACCOUNTANT!

get the phone book, call ten of them and interview them tell them what business youre in and pick the one you like best. in over a decade in the design/video business i have NEVER had a single accountant cost me more than he saved me or made me back. whether you are making $10,000 or $100,000 you might pay one $500 to $2000 for service, but i all but guaranty you it will make you back (or at very least save you) 2 to 3 times what you pay.

its just the way it works...
And ask your Accountant if you should spend a dollar and form a LLC company... not only for tax purposes (for both you and the clients who pay you), but also for potential liability issues down the road if someone doesn't like something you do, or don't do, for them.
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