Independent event planners face unique challenges, not the least of which involve establishing a successful small business or home office. Tax professional Steve Hoffman leads the “Taking Care of Business: What Independent Planners Need to Know About Federal Taxes” session at MPI’s World Education Congress (WEC), June 2-5 in Indianapolis. Here are some of his tips that will help you in the business of your business.
1) It’s a Business
You work hard at it and it must be operated as a business. What does that mean? Have a separate checking account and credit card for business expenses. The U.S. Internal Revenue Service (IRS) really looks at “co-mingling” of personal and business funds. It also means you have back-of-room tasks to perform. Keeping track of your income and your expenses is not a once a year thing. It should happen at least once a month. One good tool for this is QuickBooks. I use it in my business and produce financial statements every month so I know where I stand.
2) Take a Home Office Deduction
If your office is in the home, don’t overlook the deduction for this. The IRS has made this amazingly simple for you. If you meet the tests, this can help you save money on your taxes. The tests are that you use the home office as your principal place of business and it is your regular and exclusive use as a home office for your business. The deduction is for up to 300 square feet at $5 per square foot, which equals up to a $1,500 deduction for your home office. And don’t forget those areas like the basement or the garage where you store things—that square footage counts, too.
3) Taxes
As an independent planner, you’ll be responsible for paying your own taxes—including social security and Medicare taxes. This is done by you four times a year through an Estimated Tax Payment. For the IRS, the form is 1040-ES, available at IRS.gov. You’ll also have to make estimated tax payments on your income to the state. You’ll need to check with your state to obtain their specific form, but most are online.
While many independent event planners do this all on their own, you may wish to consider an accountant. If you do, talk to your accountant more than once a year.
4) What Expenses Can You Deduct
Deductible business expenses are what the IRS calls necessary and reasonable and directly relate to your business. So look at expenses from this viewpoint. Was that expense something that is reasonable for your business? Certainly items such as business cards qualify, so, too, does advertising and MPI memberships. The cost of attending your chapter meetings would qualify as well. Don’t forget to keep track of those business miles when you use your personal car—reimburse yourself from your business at the rate of 54.5 cents per mile—but you need to document these business miles, so keep a log book (date, purpose of meeting, etc.). Got the idea on “necessary?” “Reasonable,” according to the IRS, means not lavish or outlandish. A rule of thumb is an expense is reasonable unless there are more economical and practical ways to achieve the same result.
5) If You Get a Letter from the IRS
Don’t ignore it. It won’t go away and the IRS has a memory like an elephant. I’ve seen many folks get so nervous and scared by a letter from the IRS, but the best thing you can do is communicate with them. Determine what the issue is. If you have an accountant, take the letter to them.
Give me a call or send me an email with your tax question. I enjoy helping people with their tax questions. It’s free, as I like to “talk tax” and help independent event planners with their questions. I’m self-employed also, so have “been there, done that.”
Third-party Planner Education at WEC
Third-party planners, an important piece of the meeting and event world that makes up approximately 15% of MPI’s membership, will find valuable networking and education opportunities at WEC, June 2-5 in Indianapolis. If you’re an independent planner, following are five of the sessions at this year’s WEC that may be of special relevance to your business life.
Taking Care of Business: What Independent Planners Need to Know About Federal Taxes
Meetings in 2028: Predictions for the Future
You Don’t Need to be a Hero. You Just Need to be Ready: Creating an Emergency Action Plan
