Self employed-- what to expect?

[keepsmiling]

We are well below the median for the state- many years of around 30K, never in a high income bracket anyway... dh is self-employed attorney, used to do mostly real estate til that bottomed out.. at any rate, since he is a sole proprietor and not a PC or LLC, wondering how to fill out all the forms and how closely he will be scrutinized-- he works out of the house, most of the phone bill and some other expenses are actually business expenses.

Trust account is spotless, don't expect any probs there, but wondering if this all raises red flags.

Too many things to worry about already

Anyone else in a similar position?

[freedomnow7]

Hello - I was in the same position. Although I work part time, most of my debt came from being self employed as a sole proprietor. I worked out of my home as well. I filed pro se.

As long as the phone bill and the expenses are in his name, or if you are using a "Doing Business As", as long as he is using his own SS# as his Tax ID# on his accounts (if they are required) I think you are fine. However, I'm not expert so I would wait for others to respond as well.

[oregonpilot]

Hi..I also am self-employed, sole prop (contractor/wallcovering installer)
I am way below median (30k below)
My attorney used the usual 6 months of income but MOST of my business expenses come in the fall--liability insurance, license and bond. So he used my expenses for the entire yr and then averaged it for a per month amt.
I had to provide my trustee profit and loss statements from the beginning of the yr up to date of filing. Gets a bit more complicated because as self-employed I didn't have paystubs. So i provided bankstatements for that same period of time and cross-referenced all the bank deposits to the income amts on P & L statements.
I also anticipated even less profit in my business because of higher bond and liability insurance costs, my attorney explained that on the bottom of schedule J.
Had no problems. So far!

[numnut]

I'm in the same position, I'm trying to figure out what my monthly expenses were and trying to match deposits to checks-in is insanely difficult
what I'm having a really hard time with is when i used my savings to pay some expenses like liability insurance do i still deduct that from money in

[keepsmiling]

We've never done P&L's before--- looks like we have another hurdle to jump through. Ack.

[tcreegan]

Hi keepsmiling,

Trust account is spotless ....curious, what does this mean?

Another help for the self-employed is your tax returns where you itemized expenses and income from the business.

Sympathize with paperwork being a pain, keep that 'fresh start' in mind!

Tom in Colo

[oregonpilot]

We've never done P&L's before--- looks like we have another hurdle to jump through. Ack.

Hi smiling...
It's not too high of a hurdle. Mine was just a glorified Income & Expenses sheet for each month. One column for what people paid me and other columns were like..wallpaper supplies, insurance, cell phone. So i had a monthly income total at the bottom and then had each expense column totaled.

numnut........
using savings to pay for liability insurance shouldn't be a problem cuz when you provide copies of savings statements just note that the withdrawal was for the liability insurance Good luck to you both. hope this helped.

[keepsmiling]

Tom- our attorney (who we might be firing, she didn't mention anything about P&L's) said, "just be sure your trust acct is spotless"-- in other words, that you didn't spend anyone else's (escrow) money.... you'd have to be really stupid and/or desperate to do that, thankfully we aren't lol

Numnuts, good question, we've used savings for many things.... how to account for that, it's not really income?

Oregon,thanks for your reassurances... were you grilled by the trustee?

[oregonpilot]

not grilled at all. he looked at his little computer ( the one i had a dream i was going to puke on when he asked me a question) LOL
And said "statements looked fine"

[help1234]

Money used from personal accounts to pay for business expenses should be listed as "loan to owner" or "owner draw" then expense whatever it was used to pay for. That is how my p&l showed negative income (YUCK). I was using DH income to support my sole prop. business