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Posted by Michael Ray Brown on June 19, 2006, 12:22 pm
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Thanks for your help. It appears that my accounting has just become a bit
more complicated. My situation is unusual, but it keeps me from having to
pay self-employment tax. I supposed the invoices I submit are analogous to
a time card.
--
Michael
> Michael Ray Brown wrote:
>> I'm in an unusual situation. I'm officially an employee of a company,
>> but I'm working as an independent contractor. The company asks me to
>> invoice them for each phase of a project. However, they also deduct
>> payroll taxes from my paycheck, and directly deposit the funds into my
>> bank account.
>>
>> This means that my payments are always about 3/4 of the amount on the
>> invoice. How can I keep proper accounting of this project? I could
>> simply delete the invoice from the account, but I want to keep a record
>> of the work I've done. And I certainly want to avoid the possibility of
>> issuing two different invoices with the same number.
>>
>> I considered just voiding the invoice, but it still shows up in the
>> unpaid invoices report. Is there a way to clear a voided invoice?
>>
> That certainly is an odd way of paying an employee. It sounds like instead
> of paying you based on hours you are submitting invoices for payment.
> These payments are in the form of payroll. Sound funky to me.
>
> When you record the payment received record it for the full amount so that
> the invoice is cleared. Then record deductions for the taxes withheld. The
> net amount will be the amount of the funds transfered to your bank
> account. It will look just like a paycheck when you are done (which it
> really is).
>
> BTW, either you are an employee or you are an IC. You can't be both. You
> probably should review the IRS laws to make sure everything is being done
> correctly. Take a look at:
> http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
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