Get 1 more Tax deduction for 2018! Its not too late!

So, here’s something you may not know about. If you are not happy with the amount you owe for taxes, or the amount you are getting back – there is one more tax deduction you can obtain for the 2018 tax year – AFTER Dec. 31 2018! Its not too late!

Contribute up to $5,500 to a traditional IRA (not a Roth!) to reduce your taxable income. You have up until our April 2019 U.S. Tax deadline to make this contribution in order to be able to deduct it for you 2018 tax year!

Just make sure you claim the deduction for 2018. You can double check the claimed tax year on your official contribution receipt.

The only way its too late is if you have already signed and filed, even then get with your accountant – they might be able to revise it…? I’ve never tried to do that, but it might be possible.

You will never know if you don’t ask!

I am amazed at how much benefit I get from asking those extra questions – the ones that I used to worry would make me into that “annoying” person. But, I gotta say – its worth it.

I’m no CPA or professional accountant. So, if you want more details or verification you will need to check with your CPA.

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Billing and Invoices

It would really suck not to get paid because your invoice got “lost”.

Make a schedule, bill your client’s every monday or friday. Any day, just pick one. Okay?

You are most likely emailing invoices, and you know well enough just how crowded with junk our inboxes become.

Stay as consistent and predictable as you can.

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Save for Taxes

Being self employed, we must be or get good at saving money.

My biggest tip for this is to save 25% of your revenue into a separate bank account that exists only for tax money.

It is a lot of money, and you don’t want to ignore it until October. This situation should not be left up to “hoping for the best.” Most self employed people get broken by this.

We start making a lot of money one year, perhaps unexpectedly, and we forget to save or are pressured by ourselves and others to spend.

We owe more as self-employed than we would as employee somewhere, but it is so worth the extra 6.2% in social security and 1.2% in medicare to be your own boss.

Number 2 biggest tip, hire an accountant to do your taxes and to help you plan.

You will need to pay your “estimated” taxes 4 times a year, once each quarter.

If you are making up around 6 figures you will probably need to save more than 25%, so get with your accountant to come up with a solid plan to be sure you are ready when each quarter comes around.

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Why you must raise your rate.

There is a difference between income and revenue.

Income is the money you keep, Revenue is the money you make.

Self employed people, including myself, have classically made this mistake when just starting out.

We think we are doing well just charging for our “working hours”.  But soon enough we find hours adding up which were spent managing clients, bidding projects, marketing, being your own accountant, etc.

The problem becomes apparent when we look at our invoices and notice we are charging for 40 hours, but we worked 60 hours.

When determining your rates, factor in your non-billable hours. There is a reason company’s hourly rates are over $100 dollars. Its overhead. You may think you don’t have much overhead because your office is in your home. But realize that you do have more overhead than you realize, in time spent. And you know the saying, “Time is money.”

You will quickly find yourself working for yourself for free, just pay attention to that and make sure you consider that part of your overhead.

Calculate it up. See for yourself by keeping a time diary and be sure to use a decent rate which includes self employment tax when valuing those “non-billable hours.”

Think about it, if you hired an assistant who did all those things that don’t actually generate revenue – they would still be an expense and you would need to account for that in your rate.

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