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As 2008 passes by, what is your biggest concern as a Self Employed Entrepreneur or Small Business Owner?

• Self Employed Health Insurance? We just added a GREAT new article here!

• Self Employed Health Savings Account - HSA?

• Self Employed Retirement Plans?

• 401k for the Self Employed?

• Roth IRA Advantages?

• SUV Tax Deduction?

• Auto or Homeowners Insurance?

• Taxes on the Self Employed?

• Small Business Administration Info?

• Home Based Business?

• Making Money on eBay?

Looking for a place to start?
We have page after page of information specifically related to the needs and concerns of the self employed entrepreneur and small business owner and sometimes it can be confusing.  A good place to start your reading is our Self Employed Fact sheet (click here) or check out the column to the right that lists our most visited pages. The SEARCH BOX located at the top and Bottom of each page is also a handy tool to look for specific items.

Your 2007 taxes:
Self Employed Factsheet
Self Employment Tax
Tax Filing Requirements
2007 Tax Changes for Small Business
Section 179 Changes 2006
2007 Mileage Rates
SUV Tax Deduction 2005
Which Tax Form? The Basics Explained
Tax Tips-Last Minute Filers
IRS e-file
Free IRS Tax Forms
Free State Tax Forms

What is SelfEmployedWeb.com?

SelfEmployedWeb.com was put together with information from sources acquired over the years by the owners of Self Employed Web. Our subjects include advice on the best sources for self employed health insurance, the new HSAs - Health Savings Accounts, small business benefits, tax breaks, disaster recovery and advice for the self employed and small business owner, auto and homeowner insurance and all matters affecting the self employed and small business owner.

The fact of the matter is small businesses and self employed enterprises constitute a major portion of the US Economy. We are a major factor and we should have the same voice and concessions offered to major corporations. Too often, the self employed are not aware of government programs or advantages that could help their business. We would hope you can find something beneficial here.

We would like to think our advice on self employed health insurance, 401k for the self employed, mortgages for the self employed and information regarding small business benefits will be helpful to you. We aren't selling anything or asking you to sign up for anything - No salesman will call!

From Wikipedia, the free encyclopedia


Self-employment is the individual pursuit of capitalism. To be self-employed, an individual is normally highly skilled in a trade or has a niche product or service for their local community. With the creation of the Internet the ability for an individual to become self-employed has increased dramatically. The amount of money spent on self-help, self-improvement and training materials has reached the billions in the past decade.

Self-Employed People can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally.

To Be self-employed is not the same as being a business owner: A business owner is not required to be hands-on with the day-to-day operations of his or her company, while a self-employed person has to utilize a very hands-on approach in order to survive.


Self-employment law in the United States

Taxation in the US

In the United States self-employed workers are paid directly by clients or by their business, and some proportion of these payments is due to the government as income tax.

In the United States, a person running a business as a sole proprietorship or a limited liability company is considered self-employed for tax purposes, but the sole shareholder of an S corporation is not considered self-employed. Such a person is considered an employee of the corporation and does not pay self-employment tax, but instead pays FICA tax (matched by the corporation) at half the tax rate at which the self-employment tax is imposed -- 7.65% each by employer and corporation, instead of the 15.3% self-employment tax.

The self-employed in the United States are usually required to pay estimated income taxes quarterly. They pay both the employee and employer portions of the FICA tax (which pays for Social Security and Medicare), since they are considered both the employer and the employee. An employed person pays 7.65% (6.2% for Social Security and 1.45% for Medicare) through a paycheck deduction, and the employer pays the other 7.65%. The self-employed person pays both sides of this tax, or 15.30% total. However, since half of the hypothetical self-employment tax is allowed as a deduction against self-employment income, only 92.35% of the self-employment income is taxable at 15.30%, an effective tax rate of about 14.13%. This tax is reported on Schedule SE of the IRS Form 1040.

Many self-employed choose to incorporate to reduce this tax. Before incorporation, a self-employed person making $100,000 in business profit would pay 15.30% of that profit in self-employment tax, or $15,300. But with an incorporated business, the business can pay the owner $50,000 in salary and $50,000 in dividends (called "distributions"). The owner pays 7.65% of the $50,000 in salary and his/her corporation pays the other 7.65%, for $7650 total. Distributions are not subject to self-employment tax, so there is no FICA/Medicare tax on the $50,000 in distributions. Thus the business owner may save $7,650 in taxes. However, tax laws can be tricky, and do change, so it is usually advisable to seek the advice of a competent accountant in taking the decision to incorporate for the purpose of saving tax. (Note, however, that the above example is slightly over-simplified -- the 12.4% OASDI portion of the self-employment tax, or the 6.2% OASDI portion of the FICA tax applies only to the OASDI wage base, which is the first $94,200 of self-employment income in 2006, or $97,500 in 2007. The 2.9% Medicare portion of the self-employment tax and the 1.45% Medicare portion of the FICA tax applies to all self-employment income.)

Self-employed persons are sometimes eligible for more deductions than an ordinary employee. Travel, uniforms, computer equipment, cell phones, etc., can be deducted as legitimate business expenses. However, again, the advice of an expert may be worth the money it costs.

Self-employed persons report their business income or loss on Schedule C of IRS Form 1040 and calculate the self-employment tax on Schedule SE of IRS Form 1040.

Self-employed 401k retirement account

Self-employed workers cannot contribute to a 401k plan of the type with which most people are familiar. However, there are various vehicles available to self-employed individuals to save for retirement. Many set up a Simplified Employee Pension Plan (SEP) IRA, which allows them to contribute up to 25% of their income, up to $44,000 (2006) per year. There is also a vehicle called the Self-Employed 401k or SE 401k for self-employed people. The contribution limits vary slightly depending on how your business is organized but are generally higher than the other types of plans.

Self-employment law in the United Kingdom

A self-employed person in the United Kingdom can operate as a sole trader or as an incorporated limited liability company. It is also possible for someone to form a business that is run only part-time or concurrently while holding down a full time job. This form of employment, while popular, does come with several legal responsibilities. When working from home clearance is required from the local authority to use part of the home as business premises. Should the business hold records of customers or suppliers in any electronic form it is required to register with the Data Protection Registrar. Other legal responsibilities include statutory public liability insurance cover, modifying premises to be disabled friendly, and the proper recording and accounting of financial transactions. Free advice on the range of responsibilities is available from government operated Business

Taxation in the UK

A self-employed person may be subject to more taxes than an average employee. In addition to both the employee and employer National Insurance contributions, there may be VAT, business rates and other taxes payable to central and local governments.

Both in the US and the UK governments are cracking down on disguised employment, often described as the pretence of a contractual intra-business relationship to hide what is otherwise a simple employer-employee relationship.

Take a look at our NEWEST Section - Home Based Business Featuring some great info on using eBay to further your home based business! We have just updated the eBay section with several articles on how to Buy a Car on eBay Motors

Home Business - eBay Success section updated!
eBay Success Story
What to Sell on eBay
eBay Made Easy
Finding eBay Products
3 eBay Success Stories
eBay Motors Tips
Sell on eBay Motors

What about self employed health insurance?

An excerpt from one of our articles on Self Employed Health Insurance:

"Many people would like the opportunity to work for themselves — to not be responsible to an employer, to not punch a clock, to be their own bosses. But many of them are held back from realizing this dream for one common reason: they don’t want to loose the health insurance offered by their employers. This is especially true if they have families who depend on the health insurance, too. Choosing self employed health insurance can be a daunting task. Indeed, it is one that some people don’t even bother to investigate because they simply assume that health insurance of this type is unaffordable. But if they were to learn more about it, they might be surprised to discover that self employed health insurance may be an affordable option for them. Choosing self employed health insurance is even easier with the advent of the internet. Most of the large health insurance companies have very good websites that provide all sorts of quoting tools and information to assist you in choosing the right insurance if you are self employed. Netquote is a good example of such a service."

Read the rest of the article HERE

Updated Sections:

Hurricane Disaster Loan Information and Recovery Plans for small business owners and the self employed effected by Hurricane Katrina and Hurricane Rita:
Disaster Biz Loans
SBA Disaster FAQ
Disaster Business Loans
Home and Personal Property Disaster Loans
Disaster Planning

HSA Plans
HSA Guidance Section from the IRS

A quick note on self employed health insurance:

People who are self-employed face the same dilemma as early retirees--the burden of getting health insurance in place is on their shoulders. The solution for healthy self-employed individuals is simple, according to author Paul Zane Pilzer. These folks should buy a high-deductible individual or family policy that is qualified to be paired with a health savings account, he says. "No one should ever go without health insurance, especially since it has now become affordable for most working people," says Pilzer. The national average price for an HSA-qualified high-deductible plan is $92 a month for a single person and $272 a month for a family plan. Even better, says Pilzer, is that self-employed individuals can deduct the entire cost of health insurance premiums from their taxable income. "So your aftertax cost will be even less," he says. Pilzer recommends self-employed people open an HSA and make the maximum tax-deductible annual contribution.

If you are self-employed but you or a family member has a preexisting condition, explore a guaranteed-issue insurance policy provided by a private insurer or from your state's risk pool, depending on where you live. The rest of the family should then apply for "healthy family" coverage.

More here ........

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One the most popular tax advantages:

Hefty Tax Savings Available for “Heavy” SUVs, Pickups, and Vans Placed in Service by 12/31/05
As you have probably heard, businesses can claim substantial deductions for heavy (over 6,000 pounds gross vehicle weight) SUVs and other vehicles used in business.



For heavy SUVs, businesses can deduct up to $25,000 of the SUV’s cost in the year it is purchased. Also, the rules that limit the amount of annual depreciation allowed on passenger automobiles do not apply to heavy SUVs. Meaning, the remaining cost of the vehicle can be written off over five years; potentially adding up to a substantial first-year deduction.



For example, the maximum first-year depreciation deduction for a $45,000 heavy SUV placed in service during 2005 and used 100% for business purposes will generally be $29,000 [$25,000 expense deduction + $4,000 MACRS deduction]. The maximum first-year depreciation deduction for a $45,000 passenger auto placed in service during 2005 and used 100% for business will only be about $3,000.



A heavy SUV is a passenger vehicle with an enclosed body, built on a truck chassis that has a gross vehicle weight rating—the manufacturer’s maximum weight rating when loaded to capacity—above 6,000 and less than 14,001 pounds. However, a vehicle that otherwise meets this definition is not classified as an SUV if:

It is equipped with a cargo area of at least six feet in interior length. The cargo area cannot be readily accessible directly from the passenger compartment, but it can be either open or enclosed by a cab. Many pickups with full-size cargo beds will qualify for this exception, but “quad cabs” and “extended cabs” with shorter cargo beds may not qualify. So when you go to the dealership, be sure to pack a tape measure.
It can seat more than nine passengers behind the driver’s seat, such as hotel shuttle vans.
It has an integral enclosure that fully encloses the driver’s compartment and load carrying device, does not have seating behind the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield, such as delivery vans.
For these heavy non-SUVs, the full expensing deduction ($105,000 for 2005) is available. This means that businesses will often be able to write off the full cost of the vehicle in the year it is purchased.



As you can see, the deductions for purchasing a heavy SUV (or non-SUV) for use in your business can be substantial.

Related Articles:
SUV Tax Deduction for Dummies
SUV Tax Deduction 2005
SUV Tax Deduction Update -  MUST READ!
SUV TAX DEDUCTION LIST
Section 179-SUV Tax Deduction
SUV Tax Deduction - Section 179 Pitfalls
SUV TAX Loophole

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