Independent contractor/business expense information

[Jumper]

I've been scouring the internet (including this fine forum) and have
found very little information about how independent contractors (and/or freelance employees) and small sole-proprietorship businesses should handle some of the details particular to their situation, especially when determining what is and what is not considered a business expense.

For example,...what about annual equipment depreciation?
Expenses associate with using your home, which includes a portion
of one's rent or mortgage payment...

Since small business make up the vast majority of all businesses
in this country, you'd think there would be more information about
this. Would be greatly interested to hear anyone else's experience,
advice, or opinion on this.

Thank you,

[HHM]

What you can do for taxes doesn't necessarily translate into BK.

In your situation, it comes down to this, Money in, Money Out. That is how you approach business income and expenses. If no money is actually paid to anyone, then it is not an expense for BK purposes.

The reason you probably haven't found anything is that the answer really is that simple

[CatsInTrouble]

I guess I can tell you my experience. I run a small biz. My attorney asked for a profit loss statement and the spreadsheet to back it up. So, I gave them

- Spreadsheet of expenses for the 6months prior to filing
- SPreadsheet of income for the same
- Then a profit-loss statement, which was a summary of above, like June Income, June Expense, June Net....

Then, they used the accumulated NETS as my 6 month income level.

They also gave us an hour appt to go thorugh my expenses because, yes, as HHM said, the expenses you can use for taxes are not anywhere near the expenses you can use for BK. So he went thru my spreadsheets and took some things off-- such as that there home office deduction: NOT ALLOWED!! Basically, the trustee only wants to see very DIRECT expenses.

So, then, my 341, she hardly asked me about any of this at all. Just asked how we came to our 6 month number, considering my biz, and I told her the above.

Do you have any more specific q's?

[EbbTide]

Jumper:

I just went through my biz expenses with my attorney on Friday. I'm a work- at-home Independent contractor.

Forget what's on your Schedule C, etc. Think of your biz expenses as your cash/cc expenses. In my case, they were license fees, travel expenses, certifications, business supplies, etc. It took me all of 5 minutes to pull the records since I had noted everything in Quickbooks from the very beginning.

These would be all expenses that you would NOT have if you were not self-employed. Thus, all my computer equipment was NOT an expense, since I'd have it anyway.. but my license fees to use proprietary software associated with my industry IS a direct business expense.