U.S. Department of Housing and Urban Development …

[Pages:28]U.S. Department of Housing and Urban Development

Office of Housing Counseling

Understanding Self-Employment for Income Verification March 24, 2015 12:00 PM

Facilitated by

Booth Management Consulting, LLC

7230 Lee Deforest Drive, Suite 202, Columbia, MD 21046

FACILITATED BY: Robin Booth, CPA

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Training Topics Definitions and Terminology Self-Employed vs. Employee Computing Self-Employed

Income Questions

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DEFINITIONS AND TERMINOLOGY

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Definitions and Terminology

? Self-Employed (Independent Contractor) ? Employee ? Income ? Expense ? Costs of Goods Sold/Sales ? Net Income/Loss ? Profit and Loss Statement and Balance

Sheet ? Adjustments and Add Back ? Relevant Tax Forms

Definitions

Self-Employed (Independent Contractor)

Source

Definition

Webster's Dictionary Earning income from your own business or profession rather than by working for someone else

Internal Revenue Service Website Revenue Ruling 58112

A business owner or contractor who provides services to other businesses A trade or business activity as one that is regular, frequent and continuous and make ongoing efforts to further the interests of the business.

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Definitions and Terminology

Employee

Source

Definition

Webster's Dictionary A person who works for another person or

for a company for wages or a salary

Internal Revenue Service Website

Anyone who performs services for another person or a company and if they do not control what will be done and how it will be done.

Statutory Employee ? Meet common law IRS rules as self-

employed but are still considered employees includes drivers paid on commission or as agent, salesperson, etc.

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Definitions and Terminology

Income

Term Gross Income

Taxable Income

Self- Employed Income

Definition

Compensation for services performed and/or goods purchased before any deductions. The income that is subject to taxation. Tax able income remains after accounting for adjustments and deductions. Taxable income of a person involved in a sole proprietorship or other sort of freelance work

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