Presented by:
Cullen G. Williams, CPA
Brian M. Carle, CPA
Jeff P. Russell, Esq.
EMPLOYEE





INDEPENDENT
CONTRACTOR
VS
Receive wages reported on a
W-2

Responsible for ½ FICA
taxes (7.65%)

Receive payments reported
on a 1099-MISC
Responsible for 100% of
FICA taxes (15.3%)
Taxes withheld from
paycheck

No taxes withheld
Responsible to employer

Responsible to self
Uses employer’s tools &
resources

Uses own tools & resources

1099-MISC received does not always mean you have a
business

Profit motive

Level of personal enjoyment

Examples

Mary Kay

Making furniture

Drag racing

Sole Proprietorship

Limited Liability Company (LLC)

S Corporation

C Corporation

Partnership
ORDINARY & NECESSARY

Examples could include, but are
not limited to:

Cost of product sold

Insurances specific to the business

Legal fees for establishing business

Accounting fees for bookkeeping,
planning, and tax preparation


ALLOCATION OF PERSONAL USE

Examples of personal use
items typically include, but are
not limited to:

Automobiles

Cell phones

Computer & internet

Meals
Certain office supplies
Certain travel

Business purpose

Amount spent

Receipt, credit card/bank statement, etc

Cell phone logs

Mileage logs

Repair receipts

Vehicle registrations

Separate bank accounts

Business revenues and expenditures in business
account

Personal revenues and expenditures in personal
account
No Expense Records
Gross Revenue
$
Expenses
30,000
W/Expense Records
$
-
30,000
Difference
$
15,000
15,000
Net Taxable Income
$
30,000
$
15,000
$
(15,000)
Federal Income Tax
$
7,500
$
3,750
$
(3,750)
State Income Tax
2,385
1,193
(1,193)
Social Security & Medicare
4,590
2,295
(2,295)
Total Tax Liability
$
14,475
$
7,238
$
(7,238)

Spreadsheets ( Microsoft Excel) – Sample
income statement posted on the “Resources”
tab of our website

QuickBooks

Apps

Quarterly tax planning

Making estimated tax payments

Set aside money to pay quarterly estimates

Retirement accounts

Health insurance
Cullen G. Williams, CPA
Brian M. Carle, CPA
Williams & Associates, P.A.
11 Debeck Drive
Holden, ME 04429
ph 207-941-9810 EXT 17
f 207-941-9432
CWilliams@waacpas.com
www.waacpas.com
Williams & Associates, P.A.
11 Debeck Drive
Holden, ME 04429
ph 207-941-9810 EXT 16
f 207-941-9432
BCarle@waacpas.com
www.waacpas.com
Jeff P. Russell, Esq
Russell Law, PLLC
16 Sunset Avenue
Hampden, ME 04444
ph 207-735-6361
Jeff@Jeffrusselljd.com