My friends are incredible, industrious women.  I am super impressed with ALL the things that they do and accomplish.  Some are moms, some have traditional JOBs, but almost all of them have some kind of side gig. We live in a world of UBER, Etsy, Instacart, and so, so many amazing network marketing companies. (Yes, I said amazing, because I think they are.  Educate yourself before you judge your neighbors.)

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” – Tom Goodwin Senior VP of Strategy and Innovation at Havas Media.

Mr. Goodwin’s point above was about Media Interface, but you know what runs all of these companies?  People.  Entrepreneurs.  People who get in their cars, post their videos, sell stuff, & rent their homes.  People with initiative.  We have these great platforms now where we don’t have to invest a ton of money to start a business, so anyone can do it, which in my book is AMAZING.  You get to live the true American Dream almost entirely risk free.  I seriously think our Great Grand Parents would flip out.

Now I am going to totally geek out on the tax ramifications of all this craziness.  What this means is basically everyone goes from having a plain 1040 to adding a schedule C.  A schedule C is what you bring in when you are a 1099 employee which is a contract employee.  An Uber Driver, Nanny, Network Marketer, Instacart Delivery Person, Consultant, and so many others are 1099 employees.  You also have a schedule C if you are a sole proprietorship which means you have your own business.  You sell really neat stuff on Etsy… guess what, YOU, friend are a sole proprietor.  You have to report all your income, but if you make less than $600 from one person/company they do not have to send you a 1099.

I know we are all proud of all the money we have made in our side gig until April 15th (that is when your taxes are due), so what we do is we report our giant side gig income and immediately start subtracting!  What can we subtract?

1.  Travel – You can deduct lodging, transportation, tips, fax services & internet
2.  Meals – You can deduct 50% of your meals
3.  Entertainment – Sorry guys, NOT anymore, President Trump took this one out.
4.  Mileage – Keep track of your car travel for business and you can deduct 53.5 cents per mile a good app for this is TripLog.
5. Home Depreciation –  I would be VERY careful with this.  You can depreciate a portion of your home if it is EXCLUSIVELY used for business.  This gets messy.  If you pay a personal bill in that room, play with your child in that room, do anything considered personal in that room, it is immediately disqualified.  Even if you do keep it exclusively business, when you sell your home, you have to recapture the depreciation.  Honestly, it isn’t worth the hassle for what it “saves” you.
6.  Car Depreciation – See above.
7. Marketing/Advertising – Expense for anything you did to earn new business or increase sales, such as: promotional items (even tshirts, water bottles etc at conference), printing costs, advertising, etc.
8. Any professional, legal, accounting services
9. Commissions or fees paid to other businesses or sales people
10. Property Expenses if you rent or own a business property that you work out of:  All of the rent, utilities, up keep of that property
11. Other Expenses- Membership dues, subscription to business publications, business related gifts, fees

There are other expenses that are deductible related to paying other employees, but I am writing about my friends working for themselves alone.  The big thing is KEEP YOUR RECEIPTS.  If you think it may be deductible, keep your receipt.  Give all of this information to your tax preparer.  Your tax professional would much prefer TOO MUCH information than not enough.  Another big question I get is, “We split a room 4 ways, and I venmoed my friend.”  Get a copy of the whole receipt, and keep a copy of your Venmo record.  You should be fine with both.

Finally, I will always stress to think about your future.  Consider opening a SEP IRA (Simplified Employee Pension Individual Retirement Arrangement).  You can contribute to a SEP IRA if you earned at least $600 in Self Employment Income.  You are allowed to contribute the lesser of 25% of your self employment income or $55,000.  When you contribute to your SEP IRA that is a dollar for dollar reduction in your taxable income which is a win today and for your future.

This blog is for general information purposes only.  It is not meant to be a substitute for professional consultation from a tax, legal or financial adviser.