Working from home is great and the way you can cut costs and still make a killing with your products or services. However, you need to know that the law still applies to you regardless of the business location. There are several things you need to know so that you don’t get in trouble with the authorities in future.
You ought to manage your finances the right way, pay taxes as required and make sure you are following all the laws, both national and local. This will help you track any issues rather than finding it hard to say who’s responsible.
Your Position in the Company
The first thing you need to put in perspective is what it means to be self-employed. Even though you are selling your own products or the products of another company, you might not be fully employed by that company. If you are being paid yet the taxes aren’t withheld, then you are an independent seller. You will be notified about this, and you will have to sign an independent contractor agreement.
The other thing you need to understand is that you have to pay income taxes on any income regardless of the fact that you are not running an actual business or the employer doesn’t withhold taxes from your income. You typically pay the taxes quarterly depending on how much you earn each month. Quarterly payments will save you money because you do not have to pay a lump sum at the end of the year. If you do not know what to pay for, it is good to visit a legal counsel to advise you on how to remit the tax.
Manage Your Finances
You need t know how to manage your finances to be able to submit accurate accounts when it comes to annual tax preparation. However, you need to keep your personal and business records separate. Keep a log of all expenses and create separate accounts for both kinds of expenses. Good record keeping will help you compute income and expense easily when the time comes.
If you don’t keep proper records of your income and expenses, you stand to miss out on some tax deductions.
Other Legal entities
You need to know that there are a host of other legal entities apart from the one handling taxes. If you don’t operate wholly on the internet, you need to obtain a business license for the state as well.
Make sure you streamline every process and transaction even when you work from home to prevent legal battles later on.