Category: Uncategorized

Author Trudy Howard.

Did you know that even as an UBER driver or LYFT driver you can start a retirement plan? Yes it’s true! Self employed business owners can save for retirement with a 401(k) plan just like when they were employed. By setting up a  one-participant 401(k) plan small business owners such as insurance agents, contractors, hair stylist, barbers, consultants, and UBER/LYFT drivers can also receive a tax credit of up to $500 while reducing their taxable income! Let’s look at an example of how setting up a solo 401(k) would benefit an UBER/LYFT driver.

Hot Rod Harry drives for UBER/LYFT on the weekends to supplement his income & finance his vacations. He typically earns about $500 a week working part time in the evenings and on weekends. At the end of the year Hot Rod Harry didn’t receive a 1099 from UBER, so he contacted his tax consultant to see if he needed to file taxes on the money that he earned. Per the tax consultant, although UBER typically doesn’t send out 1099’s for amounts under $20,000 and LYFT doesn’t send out 1099’s, Harry still needs to pay taxes on the self employment income that he earned. After hearing the tax liability news, Hot Rod Harry was glad that he’d listened to his tax consultant and setup a self employed solo 401(k) so that he could reduce his side gig income of $18,000.

To earn this $18,000 Harry drove 20,000 miles which was a tax deduction of $10,900; he had $3,000 in additional business expenses such as loan/bank fees, car washes, utilities, supplies, etc. During the year, Hot Rod Harry  contributed $2,500 to his solo 401(k), and at tax time he received an additional $500 tax credit for setting up the solo 401(k). Also, because of the new 2018 TCJA laws, Harry was able to take the 20% QBI deduction which knocked off another $220 from his taxable income. In the end, Hot Rod Harry only had to pay self employment taxes on $880, which total $66. Because Harry had no other income he didn’t have to pay any income taxes on the $880.

As you can see, setting up a solo 401(k) can not only help you save for retirement, but it can really lower your tax liability. If you are an UBER/LYFT driver or a self employed person looking to setup a 401(k) for self employed people, or need help with your business taxes, please call our office at 855-743-5765.

As a business owner, in order to be successful, there are 3 things that you must manage on a continual basis. Those three things are:

Your time.

Your cost.

Your customers.

It was William Penn who said “time is what we want most, but what we use worst.” In order for your business to survive the 5-year new business hurdle, you must institute a time management system. Without a time management system, you’ll be making customer service calls when you should be making sales, ordering supplies when you should be booking appointments, and missing opportunities because you didn’t have the “time” to get to them. A time management system can be as simple as weekly appointment book, or as complex as a high priced time management software. No matter what system you choose, you must make sure that it allows you to record and track client appointments not only with new customers, but also your existing customers. I like systems that allow the client to book their own appointment, and that reduces no shows by sending automated text messages & email appointment reminders. After we begin to effectively manage our time, we can then begin to manage our cost.

When we talk about managing cost, we have to not only look at managing our cost of goods sold, but we also need to manage our fixed expenses. Fixed expenses are things such as client communication tools (phone, email, newsletter, internet service, etc.), utilities, insurance, rent, salaries, etc. Always look for ways to reduce your cost by inquiring about specials, calling carriers and asking for a discount, and most importantly continuing to shop around! Of course, no cost management conversation would be complete without discussing actively looking for ways to reduce taxable income. The number 1 way to reduce taxable income is to track business activities, and to track all of the cost associated with carrying out business activities. Thankfully, in 2018 there are many apps designed to help you track your business mileage, which is the #1 deduction for most entrepreneurs. Once you’ve gotten a system in place to manage cost, you can then work on a customer management system.

What do I mean when I say “manage” your customers? I mean that you need to institute a set system that allows you to record information about your customer, manage your interactions with your customer, and remind you of important dates surrounding your customer. When I first started in the insurance (and tax business) I wrote all of my appointments on notebook paper or sticky notes (don’t judge me). As my agency grew, I knew that I needed to become more advanced in my “tracking” system, so I graduated to index cards! Do you know what it’s like to flip through 100+ index cards looking for a client’s information and notes about them? Trust me, you don’t want to know! Save yourself the headache and time now, and setup an inexpensive CRM system that can grow with your business, allow additional users (one day you’ll be hiring employee’s), and still allow you to manage cost.

Because we truly want you to succeed, we’re giving you free trial offers of each of the systems that we use to manage our time, cost, and customers. After your free trials end, for less than $39 a month you’ll have: a toll free number, a customer service database, an appointment booking software, and an automated mileage tracker. Listed below are product descriptions and links to your free trial offers that will allow you to “try it before you buy it.”

TOLL FREE NUMBER

Clients love toll free numbers, and now you can have one for your business at a reasonable rate. I’m giving you a 30 DAY FREE TRIAL & a toll free number with ONLINE FAX, & 300 minutes, and CALL FORWARDING TO ANY NUMBER that you choose (cellphone, office phone, home phone, etc.). After your 30-day free trial you’ll only pay $9.95 a month.

TOLL FREE # FEATURES:

• Memo on Call (Patented)

• Multiple Extensions

• Internet Fax

• Auto Attendant

• Conference calling

• Call recording

• No Contract

• Instant Activation

To set this up I’ll need your full name, business address (can be home), phone number that you want the calls forwarded to, and the best time to call/text you so that you can choose your number. Please note, for vanity (1800 CALL ME) or true “800” numbers there will be an additional cost.

CRM SOFTWARE

We use Lessannoying crm software to create sales pipelines, customer database, birthday reminders, etc. Use the link below and get an additional 30 days added to the 30-day free trial (so 60 days total). After the 60 days it’s only $10 a month. Let me know how you like it! https://www.lessannoyingcrm.com/invite/3CBBD 

APPOINTMENT BOOKING SOFTWARE

We use 10to8 to manage my appointments, send SMS, TEXT, & EMAIL REMINDERS, and get bookings online. Try the FREE appointment Scheduling Software now. https://10to8.com/account/organisations/create_short/?token=howard-tax&utm_source=howard-tax&utm_medium=share

MILEAGE TRACKING FOR TAX DEDUCTIONS

I’m using MILEIQ to track my business miles, personal miles, and commuting miles. It has really saved me a lot of time and energy, and it’s CHEAP! Try it out for free by clicking the link below, and let me know how you like it.

https://www.mileiq.com/invite/NYQZB

As always, if you have any questions, or need our assistance please call us at 855-743-5765, or email us at info@howardtaxprep.com