Dave Courvoisier's Blog

Posts Tagged ‘VoiceOver Bulletin Board’

Hopefully SOMETIME before last Thursday, you met your obligation to the US Government in the form of taxes.

For many, the day is dreaded, and quickly/conveniently forgotten till sometime early next year.  For the more organized among us, that won’t/can’t/shouldn’t  be the case, because as we all know, paying attention to tax matters ALL YEAR ‘ROUND saves the heartache on April 15th.

That subject came up in a thread on the wonderful VO-BB online VO community the other day during a discussion on forming your business under an LLC or S-Corp.

As independent freelancers, often accepting full pay without submitting a W-9 to the client, Voice Actors are then expected to nonetheless pay a portion of that to Uncle Sam according to the tax code.  No W-2, or form 1099, and no withholding doesn’t mean you should withhold information about your gross pay to the IRS.

Rather, most freelance contractors voluntarily & grudgingly set aside a certain amount out of each of their compensation checks to offset the tax bill in April.  This requires a supreme amount of self-control and realistic planning.

So…how much to hold back?  Variables that determine the level of tax you’re required to pay are sometimes undetermined until many months later…maybe even as you’re doing your taxes.

You can hold back too little, and have to raid savings come April 15th…or you can hold back a surplus as a pad, and maybe even have enough left to buy that new mic you’ve been wanting…but in theory, you want to hit it on the mark as best you can.

On the VO-BB thread, some VO’s subscribe to the rule of holding back 1/4th of each paycheck…others, 1/3rd.   One person uses  a general rule of thumb in the area of 25-30%.

NYC-based bilingual voice-actor, and friend Liz de Nesnera, has a wonderful formula that she’s given me permission to reprint here.  Maybe in the midst of all these suggestions, you will find a formula that works for you in tax year 2010.  (BTW, Liz is a scheduled presenter at VOICE2010 in June for “Talking Telephony”.)

Here’s Liz’s worksheet:

In terms of setting $ aside, whenever I get paid I always do the following:
- Deposit said payment into my Biz checking account
- transfer 30% of said amount in my Biz savings account – this is what I pay taxes from (& sometimes for extraordinary expenses, but is not touched otherwise)
- transfer 25% of said amount into my “Wealth” account, a money market account I use as what I “pay” myself. – this is used for personal bills (I transfer money out of this account into a personal account to pay household bills), and is in effect my “salary”
- transfer 5% of said amount to a “giving” account that I use for charitable contributions.

So lets say I get $1000:
- $1000 is deposited into checking
- $300 gets transfered out from checking to Savings
- $250 gets transfered out from checking to “Wealth”
- $50 gets transfered out from checking to “Giving”
This leaves $400 of that payment in my Biz checking for business expenses

I do this every time I make a deposit.
(Yes the tellers at my credit union know the drill when I show up!  )

By doing things this way I have always been able to keep enough aside for Taxes and Bills and it keeps things clear for me.

Thanks for sharing, Liz!

CourVO

Pat Fraley posted some sobering news on the VO-BB.  Click HERE to read.  Then, do what’s right.

Pat’s one of the good guys of VO…a living legend, really.

Life is so fickle.  So short. 

I just lost a good friend in a plane accident Halloween day.  He leaves 3 daughters, and his High-School-sweetheart wife.

All reason enough to live each day for what it’s worth

CourVO