[thelist] Currently Freelancer - Becoming Employee?

deke web at master.gen.in.us
Mon May 7 23:16:14 CDT 2001

On 7 May 2001, at 23:06, aardvark posted a message which said:
> or, consider the 'tax reasons'... make sure your accountant is 
> giving you good advice... 'tax reasons' is way too vague, especially 
> for an employer to hear as the logic... it also implies that you 
> consider the job temporary...

Sounds like there were some business expenses that need to be
depreciated. Computers, for instance, can be given away at three
years, and you have to pay to get them hauled off at four years,
but the IRS insists that you depreciate them over five years.

What you *can* do is to sell the depreciable assets. That means
you can immediately deduct the difference between book value 
and what the assets sold for. 

The sale needs to be "arm's length" in order to qualify for tax 
purposes.  But if it's not, the IRS can only nail you for the 
difference between the asserted sale price and the real market 
value of the assets.  If you sell business assets to your brother-
in-law at fair market price and then buy them back five minutes 
later, that's going to be satisfactory for most any IRS auditor. 

If you've been fooling around with the auditor's daughter, and
he wants to nail your hide to the wall, ain't *nothing* you do that
is going to make him happy. But most IRS auditors don't want
to screw you over, if you're honest. He wants to get the audit 
over as quickly as possible, so he can move on to someone 
to a *real* tax cheat.


> > 2. I would need a 'telecommuting direct' position. I can't work
> > outside my home--so if I need Photoshop 7 for example, and 95% of my
> > income comes from the firm I work for, do I buy it and deduct it on my
> > biz taxes, or ask the firm?? Obviously I've never been an employee, so
> > bear with me. How do you employers handle the needs for software and
> > such for your 'working from home' folk? If I wanted a Photoshop
> > update, I simply bought it and deducted it--don't know what to expect
> > as an employee.
> well, as a small business owner, i find hiring an employee who will 
> never come to work a not-too-appetizing venture... how can i train 
> you?  how can i check your work in progress, instead of the more 
> expensive post-production QA?  how can i learn your strengths and 
> weaknesses?  how can i schedule you into staff meetings?  check 
> your daily progress?  keep you up-to-date on traffic?  how can i be 
> sure you aren't screwing me by working on other things or handing 
> my clients' sensitive data around, or keeping it unsecured on a 
> machine stuck on a cable modem?  how do i distribute software 
> updates and patches (which i would do, i would not allow you to 
> purchase it and deduct it, we have someone to do that)?  how 
> would i ensure you use version control?  or follow our process?  
> how would i ensure you are responsive to email and phone calls?
> i think you see my point...  i *hope* you see my point...
> now, the next question is, why can't you leave your home?  if you 
> are disabled in some way, that's one thing, and most employers 
> who *can* have someone who can telecommute can account for 
> that, but you need to know what your needs are as much as they 
> do...
> as for buying software, either it's for the job, and they do it, or it's 
> for personal use, and you can't deduct it... if you buy it for your 
> 'freelance' business, you'd better use it on a job, or at least do 
> some freelance work, otherwise it's just a tax dodge -- frowned 
> upon by the IRS...
> > 3. Where's a good place to look for the type of job I'd like? Where do
> > you guys hunt for web design jobs?
> um, locally... talk to your local ad agency organization... check the 
> newspaper... etc... don't discount the value of the old tried-and-true 
> method of job hunting...
> and where you looking to work?  try trade groups, hang-outs, 
> friends, etc...
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