Tutoring Business Payroll Management
"This is going to depend on the tax jurisdiction and I have no knowledge of the rules in Illinois.  But I'd like to give you some direction about how to think about this.   The biggest problem that you might hit is that if you collect a single check and then distribute to the tutors, you may be considered their employer.  As an employer, you would be responsible for things like  This is not meant as an exhaustive list.   Even if not an employer, you are still paying them.  You would be responsible for issuing 1099 forms to anyone who goes above $600 for the year (source).   You would need to file for a taxpayer identification number for your organization, as it is acting as a business.  You need to give this number to the school so that they can issue the correct form to you.  You might have to register a ""Doing Business As"" name.  It's conceivable that you could get away with having the school write the check to you as an individual.  But if you do that, it will show up as income on your taxes and you will have to deduct payments to the other tutors.   If the organization already has a separate tax identity, then you could use that.  Note that the organization will be responsible for paying income tax.  It should be able to deduct payments to the tutors as well as marketing expenses, etc.   If the school will go for it, consider structuring things with a payment to your organization for your organization duties.  Then you tell the school how much to pay each tutor.  You would be responsible for giving the school the necessary information, like name, address, Social Security number, and cost (or possibly hours worked)."
Stop paying too much for your online tutoring! Web Tutors provides the most professional online tutors for the absolute lowest price on the web. If you need math help, algebra help, science help, business help or any other online tutoring services, Web Tutors is the place to go. Get access to live tutors 24/7 from the comfort of your own home on your PC or even your tablet! "I agree with some of the points of the other answers but why not avoid all the guesswork? I highly recommend you not charge him now. Wait until the end of the year when you have much more information about both of your companies and then you can run the numbers both ways and decide if it would benefit you (collectively). If either of your businesses runs on a cash basis and you decide to invoice, just make sure the check is deposited before Dec 31. Update: If you want to do this for 2016, at least your husband's business would have to be using an accrual basis (since it's too late to take the deduction on a cash basis). Simply run the numbers both ways and see if it helps you. If it doesn't help enough to warrant it for 2016 you could rerun the numbers near the end of 2017 to see if it helps then. Diclaimer: I think it's OK to do this type of manipulation for the scenario you described since you have done (or are doing) the work and you are charging a reasonable fee, but realize that you shouldn't manipulate the amount of the invoice, or fabricate invoices. For example, you shouldn't ever think about such things as: ""If I invoice $50K instead of $3K, will that help us?""" I appreciate it. I didn't operate under selling the asset year five but other than that I followed this example. I appreciate the help. These assignments are just poorly laid out. Financial management also plays on different calculation interactions  so it is difficult for me to easily identify the intent at times. Thanks again. "We had a ""civics"" class when I was a freshman in high school. This was in the Ann Arbor, MI public schools. It covered the very basics (how to balance your checkbook, what are stocks, how do income taxes work, what is interest, etc.) of money management along with an overview of politics and the legal system. It was a really light class, though, and didn't go deeply into personal finance and money management. I agree that such a class would be very valuable, as would cooking, nutrition, and basic home and car repair." A company would have significantly less capital to pay a skilled worker at that point though. Keep that in mind.   So, to circle back now.   Small businesses make up a decent amount of our GDP and job creation.   Let's say you have had it working fir someone else and want to strike out on your own. You decide to start an e-commerce site, reselling from a factory on amazon. Simple enough set up. Online marketing made simple through amazon, google and facebook. But you don't have any idea how to translate that info into QuickBooks and push out the financial info needed for taxes, payroll, etc.   You need to hire a bookkeeper to sort it out, but it os only 5 hours worth of work per week. Do you hire them as a salaried employee giving them a liveable wage or pay them the rate you agreed upon for those 5 hours? You really shouldn't be using class tracking to keep business and personal operations separate. I'm pretty sure the IRS and courts frown upon this, and you're probably risking losing any limited liability you may have. And for keeping separate parts of the business separate, like say stores in a franchise, one approach would be subaccounts. Messy, I'm sure. I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations.  Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US There are too many nuances to the question asked to explore fully but here are a few points to keep in mind. If you are a cash-basis taxpayer (most individuals are), then you are not required to pay taxes on the money that has been billed but not received as yet.  If you operate on an accrual basis, then the income accrues to you the day you perform the service and not on the day you bill the client. You can make four equal payments of estimated tax on the due dates, and if these (together with any income tax withholding from wage-paying jobs) are at least 90% of your tax liability for that year, then you owe no penalties for underpayment of tax regardless of how your income varied over the year. If your income does vary considerably over the year (even for people who only have wages but who invest in mutual funds, the income can  vary quite a bit since mutual funds typically declare dividends and capital gains in December), then you can pay different amounts in each quarterly installment of estimated tax. This is called the annualization method (a part of Form 2210 that is best avoided unless you really need to use it).  Your annualized income for the payment due on June 15 is 2.4 = 12/5 times your taxable income through May 31. Thus, on Form 2210, you are allowed to assume that your average monthly taxable income  through May 31 will continue for the rest of the year. You then compute the tax due on that annualized income and you are supposed to have paid at least 45% of that amount by June 15. Similarly for September 15 for which you look at income through August 31, you use a multiplier of 1.5 = 12/8 and need to pay 67.5% of the tax on the annualized income, and so on.  If you miscalculate these numbers and pay too little tax in any installment, then you owe penalties for that quarter.  Most people find that guesstimating the tax due for the entire year and paying it in equal installments is simpler than keeping track of nuances of the annualized method. Even simpler is to pay 100% of last year's tax in four equal installments (110% for high earners) and then no penalty is due at all. If your business is really taking off and your income is going to be substantially higher in one year, then this 100%/110% of last year's tax deal could allow you to postpone a significant chunk of your tax bill till April 15. Payroll is undeniably one of the most important part of any business and it very important that you have a timely payroll every month. To avoid the hassle of payroll processing, it is best to get the service outsourced. We,DHpayroll, will be more than happy to offer you our expert services. It sounds like the job will largely be an administrative assistant (scheduling, note taking, organizing, etc.).    If you want a primer on finance to try and show you want to understand more about what he does, then there's 4 fundamental ideas that underlie the majority of topics in finance:  time value of money, liquidity preference, risk, and leverage.  If someone has read and understands the investopedia intro paragraph on those topics; it's pretty easy to explain the gist of most aspects of finance to them. This would be better posted in /r/personalfinance. But since I'm here, you need to seriously consider selling anything you can possibly part with and pick up a second and/or third job. I hope you didn't charge that whiteboard purchase. Yes, you can do what you are contemplating doing, and it works quite well. Just don't get the university's payroll office too riled by going in each June, July, August and September to adjust your payroll withholding! Do it at the end of the summer when perhaps most of your contract income for the year has already been received and you have a fairly good estimate for what your tax bill will be for the coming year. Don't forget to include Social Security and Medicare taxes (both employee's share as well as employer's share) on your contract income in estimating the tax due. The nice thing about paying estimated taxes via payroll deduction is that all that tax money can be counted as having been paid in four equal and timely quarterly payments of estimated tax, regardless of when the money was actually withheld from your university paycheck. You could (if you wanted to, and had a fat salary from the university, heh heh) have all the tax due on your contract income withheld from just your last paycheck of the year! But whether you increase the withholding in August or in December, do remember to change it back after the last paycheck of the year has been received so that next year's withholding starts out at a more mellow pace. "Same in childcare, but people are more willing to pay and the work isn't as hard.  So it kind of works out.         I do tutoring on the side and my officemate suggested I get into at home childcare because ""My daycare lady makes BANK! It's so expensive!!!!!"" then I broke down for her how inexpensive those prices really are.  She was shocked and agreed that it's actually a quite low paying gig.         People don't think critically about what they're getting for the money- they just see a huge check written weekly." I'm a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit:  - [/r/talkbusiness] [Are We Ready For A Workforce That is 50% Freelance?](https://np.reddit.com/r/talkbusiness/comments/7836tp/are_we_ready_for_a_workforce_that_is_50_freelance/)  [](#footer)*^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^\([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))*  [](#bot) For Federal Return, Schedule H and its Instructions are a great start.  You are the nanny's employer, and are responsible for FICA (social security and medicare) withholding, and also paying the employer portion.  You will offer her a W4 so she can tell you how much federal and state tax to withhold. You'll use Circular E the employer's tax guide to calculate withholding. In January, you'll give her a W-2, and file the information with your own tax return.  For State, some of the above applies, but as I recall, in my state, I had to submit withholding quarterly separate from my return. As compared to Federal, where I adjusted my own withholding so at year end the tax paid was correct. Unemployment insurance also needs to be paid, I believe this is state.  This issue is non-political - I told my friends at the IRS that (a) the disparity between state and federal to handle the nanny tax was confusing for those of us trying to comply, and (b) even though we are treated as an employer, a 'guide to the nanny tax' would be helpful, a single IRS doc that doesn't mix non-nanny type issues into the mix.  In the end, if a service is cost effective, go for it, your time is valuable, and thi is something that only lasts a few years.