File Taxes And Earn An Income
Posted on September 6, 2010
Filed Under Taxes | Leave a Comment
Every citizen is liable to submit a tax return, but many people simply hate this or they don’t have the necessary skills. They can of course go to an accountant, which will probably charge them and arm and a leg. This is where you come in: to file taxes for other people as income doesn’t require you to be a rocket scientist and it can bring in quite good money.
Of course you will first have to get yourself up to date with the latest tax laws and regulations. There are numerous books and courses about the subject. You have to know what type of income is taxable and what kinds of expenses can be deducted for tax purposes.
Then you have to meet with your client and get all the relevant information from him. If he for example works for a salary and has no other income, filing his tax return is straight forward and you can easily do it in a couple of minutes rather than hours.
If he, however, earns a salary and he has a part-time business on the side, things become slightly more involved. If he runs his part-time business from home, you will have to take special care to make sure all income and expenses are correctly allocated. Some expenses, such as his liquor bill, will be clearly for private purposes. Others, such as his fuel bill, might not be so easy to apportion. He actually has to keep a log book where every trip is noted, indicating whether it was for private or business purposes. In the absence of that you will have to make an allocation that is in agreement with the principles laid down by the tax office.
He might also be able to claim part of expenses that would otherwise be considered private. A good example of this is when he uses a home office. The electricity bill for that office, telephone accounts, computers, printing paper and printers all form part of business expenses now, although he might occasionally play computer games on the office computer!
Vehicle maintenance is another gray area. The regular service bills for the vehicle which he uses partly for private and partly for business trips, should be apportioned in a way which is acceptable to the tax office.
It’s a good idea to train your clients over a period of time to keep every single piece of documentation related to such expenses. The tax office has the right to scrutinize this if they want and without proof of expenditure he might have to pay a lot of arrears taxes in the end.
Once you know the relevant regulations and you are familiar with the affairs of your clients, to file taxes for other people as income isn’t rocket science: it simply takes an orderly approach and the ability to think logically.
Backing up is more important for you than your client so use the Mozy free trial and do it regularly to avoid any accidents.
Comments
Leave a Reply