I recently retired from 27 years in a public school system (speech language pathologist).  I will now be providing part-time/short-term speech services to public schools as a W9 employee - covering maternity leaves and LOAs, covering caseloads until they find a permanent SLP, etc.  The demand for this type of niche service is pretty big and I'm not too worried about getting gigs, except possibly during the summer - I guess we'll see how that pans out.  

(For reference, when I decided this was what I wanted to do i sent a mail merge to all the special ed directors in two counties.  I sent the email at 12:53 pm and by 1:10 pm was booked Monday through Thursday at two different school districts through the end of the school year.  I have a third district who might be interested in Fridays, but I was kind of hoping to keep Fridays free.)

Anyway, I've never done anything like this before, and I'm afraid I'll screw up my finances.  I'd appreciate help/advice in making sure I have all my bases covered. 

I already have health coverage from my pension, so I don't need to worry about that. I also have professional liability insurance.

To start, my rates are $85/hour and so far both jobs are 7 hour days - so that's $595 per day, $2380 per week.  I think I need to save about 30% for taxes, right?  So that's saving about $715 and banking about $1665 per week?

For taxes, I think I have to pay estimated taxes, but I'm not sure exactly what/how to do that. When I used the IRS Tax Withholding Estimator, it asked if I have a "job that regularly withholds federal income taxes from your paychecks."  I said no because nothing is withheld from my check when I get paid, and the tool said that I can't use it.  :-(  It seems like it's only for W4 jobs?

When I do my tax returns, I can claim business expenses now, right?  For instance, I bought my own evaluation kits for $2100, so I can claim those on my tax return?  Can I claim the laptop I bought this year if I am using it for work? (In the fall I contracted just one day per week at a school district and bought the laptop/eval kits to use there.)

Finally, for taxes, is it based on when you did the work, or when you got the money?  Example:  I worked in December for $3600, but won't get paid for that until January.  That still goes on this year's taxes, right?

I also now have to consider that I only get paid on days that I work, so holidays and sick days will affect my paycheck.  I feel like I should set up my own PTO fund so that I don't panic if there's a snow day or if I'm sick.  How do I determine what is an appropriate amount - based off my last job it seems like $550/month is what was contributed to my PTO?

Should I open separate checking/savings accounts to deposit my paychecks in and buy materials/supplies from and then basically pay myself from those accounts, or is it fine to just use my existing personal accounts for everything?

I feel like there are probably tons of things I haven't thought of, or that I'm doing wrong.  Any advice is apprciated!

Thanks!
Congratulations on your retirement and new venture! It sounds like you've got a lot of exciting things ahead of you. Here are some thoughts on your questions:

1. **Tax Savings:** Yes, as a general rule, setting aside 30% of your income for taxes is a good start. However, this can vary significantly depending on your specific tax situation and state tax rates. It would be a good idea to speak with a tax professional in your area to get a more accurate estimate.

2. **Estimated Taxes:** As a self-employed person, you generally need to pay estimated tax if you expect to owe at least $1,000 in tax for the year after subtracting your withholding and refundable credits. These are due quarterly, and the IRS provides Form 1040-ES for calculating and submitting estimated tax payments.

3. **Business Expenses:** Yes, you can deduct business expenses. This would include things like your evaluation kits, a portion of your laptop cost if it's used for work, office supplies, etc. Keep careful records and receipts of all these expenses.

4. **Tax Year:** Income is generally considered earned in the tax year when you did the work, not when you received the payment. However, most self-employed individuals use the "cash method" of accounting, which means you report income when you receive it and expenses when you pay them. 

5. **PTO Fund:** Setting aside money for personal time off is a smart idea. How much you set aside really depends on your personal comfort level and expected needs. $550/month sounds reasonable based on your previous job, but you might want to adjust this based on your new income level and expected time off.

6. **Separate Accounts:** Having separate accounts for your business income and expenses can make it easier to track and manage your business finances. It's not strictly necessary, but it can simplify your bookkeeping and make tax time less stressful.

In addition, it would be beneficial to consult with a financial advisor or accountant who specializes in self-employment or small business matters. They could provide more personalized advice based on your specific situation. You might also consider setting up a retirement savings plan if you haven't already.

Finally, remember that as a self-employed person, you're also responsible for self-employment tax (Social Security and Medicare), which is in addition to your regular income tax.

This is a complex subject with a lot of variables, so don't hesitate to seek out professional advice if you're unsure about anything. Good luck with your new venture!
### Human
I recently retired from 27 years in a public school system (speech language pathologist).  I will now be providing part-time/short-term speech services to public schools as a W9 employee - covering maternity leaves and LOAs, covering caseloads until they find a permanent SLP, etc.  The demand for this type of niche service is pretty big and I'm not too worried about getting gigs, except possibly during the summer - I guess we'll see how that pans out.  

(For reference, when I decided this was what I wanted to do i sent a mail merge to all the special ed directors in two counties.  I sent the email at 12:53 pm and by 1:10 pm was booked Monday through Thursday at two different school districts through the end of the school year.  I have a third district who might be interested in Fridays, but I was kind of hoping to keep Fridays free.)

Anyway, I've never done anything like this before, and I'm afraid I'll screw up my finances.  I'd appreciate help/advice in making sure I have all my bases covered. 

I already have health coverage from my pension, so I don't need to worry about that. I also have professional liability insurance.

To start, my rates are $85/hour and so far both jobs are 7 hour days - so that's $595 per day, $2380 per week.  I think I need to save about 30% for taxes, right?  So that's saving about $715 and banking about $1665 per week?

For taxes, I think I have to pay estimated taxes, but I'm not sure exactly what/how to do that. When I used the IRS Tax Withholding Estimator, it asked if I have a "job that regularly withholds federal income taxes from your paychecks."  I said no because nothing is withheld from my check when I get paid, and the tool said that I can't use it.  :-(  It seems like it's only for W4 jobs?

When I do my tax returns, I can claim business expenses now, right?  For instance, I bought my own evaluation kits for $2100, so I can claim those on my tax return?  Can I claim the laptop I bought this year if I am using it for work? (In the fall I contracted just one day per week at a school district and bought the laptop/eval kits to use there.)

Finally, for taxes, is it based on when you did the work, or when you got the money?  Example:  I worked in December for $3600, but won't get paid for that until January.  That still goes on this year's taxes, right?

I also now have to consider that I only get paid on days that I work, so holidays and sick days will affect my paycheck.  I feel like I should set up my own PTO fund so that I don't panic if there's a snow day or if I'm sick.  How do I determine what is an appropriate amount - based off my last job it seems like $550/month is what was contributed to my PTO?

Should I open separate checking/savings accounts to deposit my paychecks in and buy materials/supplies from and then basically pay myself from those accounts, or is it fine to just use my existing personal accounts for everything?

I feel like there are probably tons of things I haven't thought of, or that I'm doing wrong.  Any advice is apprciated!

Thanks!

### Assistant
Congratulations on your retirement and new venture! It sounds like you've got a lot of exciting things ahead of you. Here are some thoughts on your questions:

1. **Tax Savings:** Yes, as a general rule, setting aside 30% of your income for taxes is a good start. However, this can vary significantly depending on your specific tax situation and state tax rates. It would be a good idea to speak with a tax professional in your area to get a more accurate estimate.

2. **Estimated Taxes:** As a self-employed person, you generally need to pay estimated tax if you expect to owe at least $1,000 in tax for the year after subtracting your withholding and refundable credits. These are due quarterly, and the IRS provides Form 1040-ES for calculating and submitting estimated tax payments.

3. **Business Expenses:** Yes, you can deduct business expenses. This would include things like your evaluation kits, a portion of your laptop cost if it's used for work, office supplies, etc. Keep careful records and receipts of all these expenses.

4. **Tax Year:** Income is generally considered earned in the tax year when you did the work, not when you received the payment. However, most self-employed individuals use the "cash method" of accounting, which means you report income when you receive it and expenses when you pay them. 

5. **PTO Fund:** Setting aside money for personal time off is a smart idea. How much you set aside really depends on your personal comfort level and expected needs. $550/month sounds reasonable based on your previous job, but you might want to adjust this based on your new income level and expected time off.

6. **Separate Accounts:** Having separate accounts for your business income and expenses can make it easier to track and manage your business finances. It's not strictly necessary, but it can simplify your bookkeeping and make tax time less stressful.

In addition, it would be beneficial to consult with a financial advisor or accountant who specializes in self-employment or small business matters. They could provide more personalized advice based on your specific situation. You might also consider setting up a retirement savings plan if you haven't already.

Finally, remember that as a self-employed person, you're also responsible for self-employment tax (Social Security and Medicare), which is in addition to your regular income tax.

This is a complex subject with a lot of variables, so don't hesitate to seek out professional advice if you're unsure about anything. Good luck with your new venture!<eos_token>