Rothwell International - Benefits for Consultants!

It seems that most people are fighting a battle that seems endless – a battle of you vs. the economy. Interest rates are creeping up again, and credit seems almost impossible to get these days. Trying to cut costs in every way possible may be your best defense again these opponents. Take a good look at your cash flow; what are you spending money on that could be cut out? Every penny counts! Pay especially close attention to the interest rates on your business credit cards! These cards are exempt from typical credit card laws. The company holding your business card can raise your interest rate without giving you the notice that they have to give to holders of personal credit cards.

Time is money, and taking time to save money is the same as spending time to make money!

Sites such as billshrink.com and mint.com can help you look at what you are spending. Billshrink.com allows you to enter information on what you are spending on your wireless bill, cable, and credit cards, and the site calculates if you are getting the best deals that you can. Mint.com helps you organize, track, and manage your finances. This website allows you to make a budget and stick to it! Also, call your credit card providers and make sure that you are getting the best rate possible; if you have been paying your bills on time the card companies should be more than willing to help you out!

Written by Amanda Freeman, a Consultant’s Financial Planner

Everyone has heard about how the IRS is cracking down on the qualification of ICs. When is it correct to use a 1099 vs a W2? If you have ever asked yourself this question you can go to http://www.comptroller.ilstu.edu/downloads/20-factor-test-for-independent-contractors.pdf.   This is a 20 factor test that helps you determine if being an IC is right for you. If you are filing your taxes incorrectly there are 3 options you can take to correct this:

• Ask your employer to allow you to work appropriately as an independent contractor.
• Ask your employer to hire you as a W2 employee so that you are working legally.
• Hire an employer-of-record so that you are technically a W2 employee, but still allow you to be your own boss.

Written by Amanda Freeman, a Consultant’s Financial Planner

Refinancing your home as an IC (Independent Contractor) can be a major hassle.  And even after you jump through all the hoops, it’s not a sure thing that you’ll qualify. Some of the items that you need when you refinance as an IC are: signed individual tax returns and all schedules from the past 2 years, signed federal tax returns and all schedules for the past 2 years, a year to date balance sheet, a year to date profit and loss statement, and a business credit report.

After you collect and send all of those documents in, the bank doing your refinance must evaluate your income. There are 2 steps to this. One is meeting the required debt to income ratio, and the other is looking at your annual income. If your income has declined in the past 2 years, you will most likely not be eligible to refinance even if you meet the debt to income ratio.

Food for thought!

Written by Amanda Freeman, a Consultant’s Financial Planner

Mileage Reimbursement Rate to Increase

The IRS announced an increase to mileage reimbursements beginning July 1, 2011.  For business miles driven, the rate will increase from 51 cents per mile to 55.5 cents per mile.

Also, reimbursements for medical and moving mileage expenses were also increased from 19 cents per mile to 23.5 cents per mile.  For more information, view the IRS update.

2 Tips for Independent Consultants regarding Insurance and Expenses.

1) Health care Insurance and Business Insurances

Join our Employer-of-Record service and become a card-carrying member of our group! United Health Care provides us a package which includes medical, dental, vision, life and disability plans. Guaranteed issuance! No fear of being turned down due to pre-existing conditions.

You will also enjoy immediate access to other business insurances which include workers compensation insurance, general or professional liability insurances and errors and omissions insurance. Certificates of Insurance will be sent to your clients immediately.

2) Expenses need to be written off

You will reap exceptional rewards from our Expense Reimbursement program! Rothwell International uses the (IRS-approved) Accountable Reimbursement Plan which eliminates expenses from being reported on the Form W-2 and therefore is not included in your gross income. Your gross income will be reduced by the amount of your business-related expenses (can you imagine the immediate savings?!).

Benefits for Consultants, finally!

The ability to reduce your taxes to Uncle Sam by writing off your expenses is one of the main reasons that people choose to go the ‘independent consulting’ path.  You can write off meals, home-office, supplies, computers, fax machines, cell phone, gas, mileage, hotels, etc. etc.

If you are being forced to go through a W2 relationship, than you may be missing out on all these tax optimizations (unless you go with an Employer-of-Record that uses an Accountable Plan as their payroll method).  Even if you are incorporated, you must be extremely diligent and self-disciplined to keep up with your business-related expenses (no one but yourself can do that!).

If you are using an Employer-or-Record model, it is extremely helpful that they keep you motivated to keep track of (and submit) your expenses weekly/monthly so that you can get as much tax benefit as possible. If you wait till the end of the year, than you are guessing as to your expenses…and quite often you will under-guess.  Plus if you get audited, you will be scrambling to grab those receipts.

So, if you are feeling less than efficient with your tax preparation/expenses submittals, than consider going through an Employer-of-Record model.  With your Employer-of-Record, you’ll be able to take advantage of their many, many services that are provided to you as well.

To request more advice about this topic or to see if you are efficiently writing off your business-related expenses, go to the top of this page (www.Rothwell-International.com) and click the button  “Get Your Free Assessment” today!

Jill Freeman is a consultant’s consultant. For more information on this message or on the employer-of-record model, contact her at [email protected]

How can independent consultants drive down their taxes?

What are your business structure options?

Independent Consultants (ICs) land in this career due to 2 different situations:

1)  This career is chosen.  ICs can have as many projects/clients as they want. They create their own rates, work their own hours, and so forth.… all while being able to write off all business-related expenses in order to reduce tax liability.  The independence from corporate bureaucracy can be a breath of fresh air.

2) This career is forced upon them.  This happens when an individual is given a project to complete, rather than a full-time job (projects are becoming a typical way for companies to get work done in this new era).  This contractor is now a consultant running his/her own business!  The IC has to now handle all the tasks and strategies that go along with being a business-owner.

What business structures are options for the Independent Consultant?

1) You can choose to run your consulting company showing income solely on 1099’s.  Your  business related expenses can all be written off to decrease your tax liability.  The negatives to this structure are: a) some clients are unable to work with 1099s (compliance issues),  b) you’ll need to hire brokers (to get your own health care and business insurances) and you’ll need to hire an accountant/bookkeeper to organize your back-office tasks and deal with your taxes (quarterly payroll taxes and tax optimization). You are able to invoice your clients and handle the collection calls yourself.

2)  You can legally set up a business.  There are several legal structures in which to set your business up. The most common forms of business are sole proprietorship, partnership, corporation, S corporation and a Limited Liability Company (LLC). Go to http://www.irs.gov/businesses/small/article/0,,id=98359,00.html for specific information on the details of these forms of business.  An Accountant will be helpful in order to choose the type of structure (you can set up the business on your own or hire an attorney), and then the accountant will help you determine the rules for your corporation and expenses, help you with P&L statements, balance sheets and possibly file your taxes.  You will choose insurance brokers to help you get your own health care insurance and business insurances (Workers Compensation, Liability, Errors and Omissions, etc.).

3) Another method for running your consulting business would be to work with an employer-of-record. If your chosen employer-of-record uses an IRS-approved Accountable Plan, you can reduce your taxable income by all of your business-related expenses.  They will file all of your quarterly taxes, and possibly provide health care insurance and business insurances (such as Workers Comp, Liability, Errors and Omissions, etc.).  With an employer-of-record, an Independent Consultant can get away without needing the help of insurance brokers and accountants or bookkeepers. Though they will be in essence a W2 employee, they can have as many projects/clients as they want, choose their own rates, work their own hours, and so forth.…all while being able to write off all business-related expenses in order to reduce tax liability.  Employer-of-records also provide all the back-office services (invoicing/collections and payroll) too.

Lots to choose from…  Happy exploring!

Jill Freeman is a consultant’s consultant. For more information on this message or on the employer-of-record model, contact her at [email protected]

Independent Contractors like to be “independent” for various reasons including:

• they can write off all their expenses
• they are free to work where and when they want
• they can make higher hourly rate than if they were a corporate employee doing the same work
• etc., etc.

But they do not like certain things that hold them up (and make their life more difficult).  These tasks keep them away from the work they know and love, and waste their valuable time.

• Not being able to get on a group health insurance plan (sometimes they may have some medical issue that denies them insurance altogether). Dealing with insurance brokers altogether is burdensome (Workers Comp, Liability, Errors and Omissions too).
• They hate the administrative junk that goes along with a business (invoicing, collections, taxes, insurance brokers, etc.)
• They lose some contracts because a potential client company can’t bring them on as a 1099 (due to compliance reasons).

So…companies like Rothwell International takes care of all of these issues for the Independent Contractor.  But to do that, the ‘Employer of Record” model is needed. But we don’t care how many clients they have streaming through us, they find their own contracts, they set their own rates, they set their own work schedules, etc.

Rothwell uses an IRS-approved Accountable Plan for payroll…which allows the consultant to deduct all of their business-related expenses from their taxable income.

Most payroll providers don’t allow the consultant to have this level of freedom (especially with allowing all of their business-related expenses to be written off and saving all of that tax).

Plus, we don’t charge any margin or fee or hourly rate to a client company (this is a huge difference between us and a payroll provider).  Our fee to the contractor is $75/week admin fee (we also have a sliding scale statutory fee that covers the overhead we endure for the consultant’s tax burden that we bear).  The tax savings themselves pay for this fee alone.

Interested in checking this model of doing business out more closely?  Go to: www.BenefitsForConsultants.com and let us know that you want a “Free Assessment.”

Understanding Crowd Sourcing

New Solutions for Small Businesses?

What is Crowdsourcing? Wikipedia defines “crowdsourcing” as: “the act of outsourcing tasks, traditionally performed by an employee or contractor, to an undefined, large group of people or community (a “crowd”), through an open call.” Typically, crowdsourcing involves broadcasting a problem via the web and asking a large group of unknown individuals to solve the problem. Either the crowd or the asking individual can determine which solution is the best, and reward the winner either monetarily or via recognition. Crowdsourcing can also be used to do piecework; things that could take you hundreds to thousands of hours can be assigned to a “crowd” do be completed in days.

Some examples of crowdsourcing are: Design work. Numerous web sites allow users to submit a design project and have designers bid on the work. In other cases, designs are pre-submitted from the “crowd” and the user then pays for the winning submission. Programming. The same concept is used for programming applications and designing websites. Web tools are available to have your program application done quickly and often cost effectively. Data Entry. Have a large collection of small parts that need to be sorted for your website? You can use crowdsourcing to have the parts cataloged and categorized for you on a price per piece basis. Each member of the crowd gets paid for the portion of the work they complete. Data Classification. Take a large set of data and have the “crowd” help you sort through it. NASA has used crowdsourcing to help document its library of photos and even help prioritize the images it takes from the Mars Orbiter. They did this by launching a tool and asking the public to participate in their organization project. How can Crowdsourcing Help? Businesses. You can use crowdsourcing to develop a new business logo, design a website, evaluate/sort data, or get feedback on a new product or service. Essentially, crowdsourcing allows you to cost-effectively tap into a huge network of affordable freelancers. Freelancers. Crowdsourcing can be a great way to drum up new business. Websites exist to source new work from a wider geographic area than might otherwise be available to you. These crowdsourcing websites that connect businesses with freelancers generally collect a small one-time fee, although others take a percentage of the total transaction. Sample websites: www.99designs.com: allows customers to submit a call for identity, web, print, graphic, or merchandise designs, set a price, and select a winning design. www.vWorker.com: allows customers to access thousands of computer programmers around the world www.CloudCrowd.com: helps business owners or individuals access editing, translating, copywriting, and PR services Is there a downside? Some of the issues that come up when discussing crowdsourcing include making confidential information public, out-sourcing local work to third world countries, and uncertainty about the quality of work done by the “crowd”. While there are varied opinions about the value of crowdsourcing, the concept appears to be here to stay.   Retrieved from a great newsletter dated April, 2011 written by: Tarantino and Co., CPAs.  http://www.tarantinoco.com/

With the onslaught of healthcare insurance dilemmas for anyone but the young and healthy, Rothwell is determined to provide an extremely thoughtful and unique solution for contract consultants. Become a member of our group, and receive access to great group health care insurance (lower deductibles than most health care insurance you could choose on your own).   Also receive more tax help than you thought possible!

It is our vision to provide almost any service that contract consultants need on a day-to-day basis so that your life can be as hassle free as possible.  We will submit your taxes quarterly (no trying to save tens of thousands of dollars each year to pay back to Uncle Sam).

For a small weekly fee ($75/week pretax) and another fee that is based on a sliding scale to cover our overhead of taxes, you can get EXTREME services that will send your consulting life into a whole new realm.  You will feel comfortable because you and your family will be secure and stable, with a group health care insurance plan, every tax optimization possible, invoicing and collections, business insurances, compliance, etc., etc.

Sign up today at www.BenefitsForConsultants.com.

Or call Jill Freeman at 770-289-9502