• Add up all your monthly expenses, so you know what a month of personal expenses really are for you.
• Still in a day job? Then start setting aside 5 percent of your net pay each paycheck and build savings.
• Sound like too much? Start with a goal of setting aside $100 week=$5,200 a year, which is a nice cushion.
• As an entrepreneur, you want to be sure that whenever you take a cash draw from the company, you set aside money for tax. Don't be surprised later with a nasty tax bill.
• Start now. The most important thing is to create a habit of saving each week.

Many self-employed employees who file Schedule C are not aware that Medicare expenses for themselves and their spouses can be deductible. Up until 2010, the IRS did not specify that Medicare premiums were deductible. In 2010, for the first time, the IRS indicated in Publication 535  that Medicare premiums, under certain circumstances were deductible even for non-itemizers.

Specifically, Publication 535 ( which has not been updated since 2010) states that you may be able to deduct premiums paid for medical, dental, and qualified long-term care health insurance for yourself, your spouse and your dependents. You cannot  take the deduction for any month you were eligible to participate in any employer (including that of your spouse’s employer) subsidized health plan.

One web site, specifically Kiplinger, states that you can deduct  expenses for Medicare Part B, Part D and Medicare supplementary insurance. Other sources refer to Part B only. I talked to an IRS representative who agreed with Kiplinger’s interpretation. Unfortunately the opinion of an IRS agent on the phone can’t be used as gospel. I have talked to several Enrolled Agents and CPA’s. None disagreed with Kiplinger’s interpretation. I suggest that if you do have your return prepared by an enrolled agent or CPA, ask for his opinion.

Publication 535 also states that if you were eligible to take a Medicare deduction in prior years, and did not, you could file an amended return. The fact the IRS specifically states that Medicare expenses are deductible, it seems reasonable to assume that all Medicare premiums would be deductible as well as Medicare supplementary insurance premiums, as long as you are not participating in any subsidized health plan.

Think that just because you pay a contractor using a W-9 that they are an independent contractor instead of an employee? Think again.

Whether a worker is an employee or an independent contractor relies on much more than a W-9, and the same worker could be classified differently for different purposes. The IRS employs a 20-factor test to determine whether an independent contractor is really an employee. Under copyright law, only certain situations meet the criteria for a worker to be an “employee” such that the employer, rather than the worker, owns the work product. And some courts have held employers liable for the actions of workers who were “independent contractors” under the tax code but “employees” at common law.

So how do you know whether you have employees or independent contractors working for you? Almost all of the tests the IRS employs have to do with the amount of control you exert over the worker. When your intent is to hire an independent contractor, your best bet is to enter into a written agreement that spells out the terms of your business relationship. Your agreement should address all of the above factors as well as other concerns, such as, for example, the ownership of any resulting intellectual property.