Working from home can be a lot of fun and quite lucrative but there are a lot of things that you need to know from a legal standpoint that will help keep you out of trouble. Things such as managing finances, paying appropriate taxes, and following laws that the IRS has created are all important things that you’ve got to learn.
One of the first things that you need to understand is whether you’re truly self employed or not. You can work from home and make all the decisions but still be associated with a company. Usually from the start you’ll be told whether you’re an independent contractor or business owner and you’ll have to sign some sort of form proving that you’re aware of your status. If you’re unsure whether you’re an independent contractor or not you can go on the IRS website where you’ll be able to find a worksheet that help determine if you’re self employed or not.
If you’re self employed you need to understand that you have to pay an income tax which is also known a self employment tax. Most people make these payments quarterly which is smart because you don’t want to have to pay a lump sum of money every March or April when you’re handling your annual taxes. The best thing to do, in my opinion, is to set up a corporate entity such as a LLC, S Corp, or C Corp. You should seek out an accountant who is familiar with small business rules and taxes.
Now most likely you’ll hire someone to take care of your taxes each year, but you still need to do a good job managing your finances throughout the year. The number one rule that you need to remember is that you’ve got to separate your personal finances with your business finances; this will be very important come tax time. Keep track of all business expenses and receipts.
If you have any further questions about laws and regulations surrounding small businesses I would suggest that you visit the IRS website. http://www.irs.gov
