Maternity and Paternity pay as a self employed professional in the US


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The US is one of the last developed nations that does not have a national maternity pay program.  If you are self-employed, the government will not subsidize taking time off from your business.  In order to effectively prepare for pregnancy and childcare without letting your business suffer, consider some of the following:  

 

·      Four states (California, New Jersey, Massachusetts, and Rhode Island) offer disability insurance.  Their programs only cover around 60% of salary and last 6 weeks or less.  If you live in one of these states you can pay a small amount from your paycheck to qualify for benefits when you have to take time off. 

·      If you do not live in one of these states, you can purchase short-term disability insurance from a private insurance provider.  Make sure you know how long you must pay premiums before you can collect benefits.  This should provide you with income similar to what you earned before you had your child. 

·      Hire someone to help run your business while you are gone.  While you work from home, this person can meet with clients and take care of day-to-day business operations.  This small expense can help prevent a dip in sales or loss of clients. 

·      If you want to maintain a more active role in your business, ask family members to help care for your child while you are gone.  Be sure to do this while you are pregnant so you are prepared if you need to continue working after you have the baby. 

·      Make sure not to add to your workload.  Avoid extra stress during this time by putting off any large-scale business changes and try to say no to new clients for the time being.  

 

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Tax obligations for an E-commerce, US-based LLC if the owners live in the US vs. UK.

E-Commerce can seem like a complicated type of business for tax planning purposes.  Due to the possibility of worldwide sales, it can be unclear as to which taxing jurisdiction the business falls in.  Use this chart to compare tax obligations for an E-commerce, US-based LLC if the owners live in the US vs. the UK.  

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US 

UK


Income Taxes

Income from an E-commerce business that is organised as an LLC will not be subject to corporate taxes.  Income will be reported on the owner’s individual return.  

The LLC will still be taxed by the US, but subsequent UK tax is usually avoidable as a result of the US/UK double tax treaty.  Total tax obligation should remain the same. 


Deductions

All normal operating expenses are deductible when calculating taxable income.

All normal operating expenses are deductible when calculating taxable income.


Sales Tax/VAT

You only have to collect sales taxes from customers in US states where your company has a significant “presence” (i.e. the state you live, any state you have a warehouse in).  Read more here to find out where your business should charge sales tax:  https://www.taxjar.com/guides/intro-to-sales-tax/#determining-sales-tax-nexus

Value-added tax (VAT) should only be charged and collected when selling to other EU countries.  This tax can be paid to HMRC each year.  However, sales tax should still be collected from customers in any state where the business has a “presence” and paid to the IRS. 


Tax on Royalties

o withholding tax on domestic royalties.

Due to a treaty between the US and the UK, there is not withholding tax on any royalties paid to the business.

 

To conclude, tax liability should not be dramatically different if the E-commerce business owner moves to the UK from the US.  As long as they already have a good grasp on deciding when to charge sales tax, the transition to the UK should go smoothly.

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Hobby or Self-employed work on US tax return


SAVING US EXPATS MONEY FOR OVER 10 YEARS.


US Expats are unique when it comes to taxes. There are a number of unique expenses, deductions and reliefs that are available to US Expats. We specialise in providing a tailored US Tax service that focuses on minimising tax owed and maximising on the US tax incentives and reliefs available. 

Our US client, Kurt Egyiawan in The Exorcist (2016)

Our US client, Kurt Egyiawan in The Exorcist (2016)

 

Many Americans enjoy hobbies that are also a source of income. It is important to remember that any income, even if generated from hobby needs to be reported on a tax return. Income and expenses are reported differently when you are carrying out a business or simply enjoying your hobby. Therefore the starting point for anyone who is unsure is to determine whether the activity is in fact a hobby or business activity.

The IRS provides useful nine factors to determine whether your activity is business or hobby:

  • Whether you carry on the activity in a business-like manner.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

If you are still not sure after going through the factors, the IRS provides further guidance on ‘not-for-profit’ rules, in its Publication 535, Business Expenses.

If you determined that the activity is considered to be a hobby, you need to look at the allowable deductions and their limits. Generally you will be able to deduct ordinary (common and accepted for the activity) and necessary (appropriate for the activity) hobby expenses and you will be able to deduct hobby expenses only up to the amount on hobby income. Unfortunately hobby loss cannot be deducted from other income on your tax return.

 

On your tax return:

Your hobby income needs to be included on line 21 (other income). In order to deduct hobby expenses, you must itemize your deductions on the tax return and claim the hobby expenses on Schedule A.  See Publication 535 to see which categories of expenses go where on Schedule A.

 

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Creative Industry Growth at TWICE the rate of the wider economy

Bambridge Accountants are welcoming the new, official Economic Growth Figures show that the creative industries grew at twice the rate of the wider economy in 2015-2016.

The UK creative sector is now worth £91.8bn (GVA). This is more than the automotive, life sciences, aerospace and oil and gas industries combined. The stats show that the creative industries are worth more than seven times the UK’s gross annual contribution to the EU and would pay for the estimated Brexit divorce bill of €50m twice over.

Tim Donald, Artistic Director, Marketing Consultancy, www.TimTheCreator.com

Tim Donald, Artistic Director, Marketing Consultancy, www.TimTheCreator.com

 

Creative Industries of Particularly High Growth

Crafts Industry - 14.6%

Design and Fashion - 11%

Creative Tech Including Games - 11.4%

Publishing - 7.7%

Film and TV – 6.6%

It is also notable that the advertising industry has almost doubled in size since 2010, growing by 4.3% in the 2015-2016 period.

These statistics are a testament to the innovation and resilience of creative industry professionals and it’s contribution to the wider economy.

 

FROM CREATIVE PROFESSIONALS TO CREATIVE PROFESSIONALS