The latest social media shitstorm is about Guido Barilla saying, “I would not do a commercial with a homosexual family, not for lack of respect toward homosexuals – who have the right to do whatever they want without disturbing others – but because I don
I’d like to try and crowdsource an answer to a tax question I’ve had over the years but never felt like I had a good answer to:
IRS Topic 511, Business Travel Expenses, describes qualifying expenses while travelling. It is written with a very employee-centric tone, which isn’t particularly helpful for me as a self-employed consultant who works primarily out of his own home office.
1) Is New York City “close enough” to New Jersey to consider it the same “general area” or does travelling to New York City count as valid business travel in my case?
Suppose I have a client (one of many) for whom I travel, once a week, from my home office in New Jersey to their office in New York City. Since I earn the majority of my income working out of my home office in New Jersey, I think it’s appropriate to consider New Jersey my “tax home.” But, the tax topic is worded using the phrase “general area” which is vague. How is this supposed to be interpreted?
2) What does the IRS consider an “assignment”?
Topic 511 refers to temporary and indefinite “assignments” and talks about durations less and greater than one year. For the self-employed consultant, are clients considered “assignments”? Are individual projects for a client an “assignment”? I can’t find a definition for “assignment” in the IRS Tax Glossary.
Most clients of mine are of the “indefinite” kind, ones I intend to work with for at least a year or more. Individual projects for my clients generally span anywhere from less than a single day up to several months, but never a year or more.
I think this qualifies my one-day-a-week on-site visits as “short term travel” and therefore my travel expenses are deductible, but given sufficiently loose interpretations in the IRS’s favor, it makes me nervous. How is this supposed to be interpreted?
Naturally, I can arrive at my own conclusions and interpretations of what this all means. What I’d like to know is if anyone here has dealt with the IRS with respect to these two issues, and what their official stance is.
I suppose I could try and call the IRS and try to explain this to them and get an answer, but I’m not too keen on getting a verbal one-off interpretation by some call center representative. Getting this in writing is somewhat important, for obvious reasons.
You know what? Playing Super Mario Bros., the vintage NES version, on the Wii, really sucks. Why? The slight lag due to the Bluetooth Wiimote just makes the gameplay not feel identical … and it bugs me. 🙁
Nintendo needs to release with a “throwback NES” — a game console contained inside the original NES plastic housing, with every NES title ROM ever released, preloaded on a 64 GB flash chip, with the original connectors and two vintage corded square NES controllers. It would power on, you’d select what game you want to play from a menu, and it would load the ROM off the flash memory. Sure, I’d miss the occasional blowing on the contacts of the cartridge, but this would be such an awesome product.
I’d pay $100, maybe even $150, for it. And I’d play with it a hell of a lot more than I play with the Wii.
When I used to do freelance work, I’d focus on getting it done and wrapping it up then moving onto another project. I’d seek out projects that, once complete, had a minimal amount of ongoing maintenance. Basically, once I was done with a project, that was usually the last I’d hear from the client, despite the glowing praise that they’d give me at the end.
In other words: I sucked at sales.
But, how is that possible? I’d find clients, engage them, close the sale and deliver the goods! Sounds like I’m a great salesperson — there’s plenty of sales people out there who can’t even do this much, right? Sure, I might not be the worst salesperson ever, but I forgot the golden rule of sales.
The first sale doesn’t count.
Huh?! “Of course it does,” you’re probably thinking. “You got their money, why doesn’t it count?” Let me explain …
Many years ago, my friend Peter, who I consider to be a master salesperson, when I first started freelancing, let me in on a little secret. He simply told me, “The first sale doesn’t count.” He went on to explain that anyone, willing to do or say anything, can get just about any qualified lead to buy at least once. However, the cost of new customer acquisition makes this an infeasible, unsustainable way to do business. The real money is in continued sales with existing customers.
I totally ignored this essential rule. Basically, I’ve been a wage slave, trading hours for dollars, except this time with only myself to blame. I wasn’t building a business, I was just earning money. And, for a long time, this was okay, because I had steady income and I had no reason to do things differently.
Now that I’m doing doing this full-time, without the safety net of that steady income, I’ve spent a lot more time studying what I do, figuring out what’s working and what’s not. I realized that I have to change the way I operate — the way I do business — and remind myself that the first sale doesn’t count.
So, what do I do, then?
I need to focus on improving my up-sell and cross-sell skills. I need to find ways of turning good customers into sources of continuous, incremental revenues. I need to invest my time in creating products that can generate passive income, so I can stop trading hours for dollars. I have to build a network of reliable contacts who I can hire to do the work that doesn’t necessarily require my direct involvement.
Sure, this all probably seems very obvious, but it’s surprised me how many entrepreneurs and freelancers I’ve talked to seem to have missed learning this vital lesson, myself included. Perhaps you’re making the same mistake, or you’ve moved past it or avoided it altogether. I’d like to hear your story in the comments below!