Except for this: If you’re self-employed, or being asked to work as a contractor, make sure you get advice from someone who knows. For the record, that group does not include me.

My taxes went very well this year, and I’ve received me refund. It was close enough to my estimate to keep me from concern. What has raised a red flag for me is the number of friends and relatives who have been asking me questions about this topic, and often doing so too late.

When is it too late? I’d suggest that’s when you have a huge, unexpected tax bill and you’re wondering what to do about it. (Think: Payment arrangement.) There appear to be some employers out there who are trying to replaced regular employees with contractors. There are legitimate cases of contract work, but it’s not a sort of open choice. There are rules that indicate who is a contractor and who must be an employee. Each person in an agreement has certain duties.

If you’re in this situation, don’t go to friends and relatives (such as yours truly) who might know. Go to someone who does know. Find out whether the arrangement is legal, and if it is legal, what it’s going to cost you.

One piece of bad advice I’ve heard in several cases is this: You don’t need to worry about your estimated taxes. Your deductions (due to family size, etc) will take care of it. Self-employment tax doesn’t work that way. It starts from your profit and comes off the top. That nifty standard deduction doesn’t help, though refundable credits will.

I hope I’m just giving enough information here to warn people who are treated as contractors by their employers that they need to get reliable information. Don’t make any decisions based on this post other than the decision to check. It might cost you a little bit of money now, but not doing it could cost you a great deal of money later.

Know whether your contract arrangement is legal, and know how much it will cost you in taxes.

Related articles

• Self-Employed Federal Income Taxes (turbotax.intuit.com)
• What is a Schedule C IRS form? (turbotax.intuit.com)

The only surprise here for me is that Microsoft® is going with the flow rather than trying to force the new operating systems on everyone.  I  think they’re wise.  Over time, people will upgrade, especially as they buy new hardware, and so the new gets to beat the old.

So I enjoyed reading this article on MSNBC about how Ford is nonetheless benefiting from the current situation and the fact that they are surviving without bankruptcy or the type of federal intervention that is happening with Chrysler and GM.

I sincerely hope this will continue. Companies fail for a reason, and it’s not just the economic downturn. Note that there are surviving companies, including Ford and some foreign-owned manufacturers building in the United States. The downturn was and is survivable, and those companies that can survive should.

I don’t say this because I don’t care about employment or economic displacement. I firmly believe that if failure is rewarded, more failure will result. If that is the case, all we have done by avoiding some pain now is to store up more pain for the future. I have no faith that the government can “direct” these companies in such a way as to make them viable in the long term.

So my congratulations go to Ford. Stay out of the government’s pocket, and my next car (I currently drive a GM product) is almost certain to come from you!

I am not generally a fan of motivational books, and that is what I expected that this book would be when I picked it up–a lot of cheerleading and motivational speaking without that much practical advice. I already know I need a good attitude to succeed. I don’t particularly need a good attitude toward people who tell me about a good attitude and then charge me for it.

In this case, I was pleasantly surprised.  While there is some motivation in this book, and there is some repetition, there is also much good information, and a basic idea that is very important–you have to stand out from the competition to succeed.

Now that may sound pretty obvious, but I wouldn’t be surprised if you were trying to attain that distinction from your competition in many of the ways that McKain describes.  Then he explains why our normal process of creating distinction doesn’t work.

The first four chapters get things set up with stories and examples.  The real meat starts in chapter five with the four cornerstones of distinction:  Clarify, Creativity, Communication, and Customer Experience Focus.  Again, each of those things sounds like ideas we have all heard, but what you need to do is get the complete picture.  How do you make these things happen?

McKain lays it out pretty clearly.  I have operated this business, Neufeld Computer Services, since 1997, and I’m now emphasizing Energion Publications and no longer expading the computer business.  This book both explained to me the success of my computer services business, and also helped me bring some additional focus to my publishing business.

For a number of years I wondered why I had a high degree of customer loyalty and good personal referrals for new business when I was working part time, lacked the sophisticated shop and equipment that major companies take for granted, and as one person often had to make one client wait while I finished work at another.

On reading this book I put customer comments together with the ideas presented and realized that my distinction was simply taking responsibility.  While I do often have to refer customers to a software provider or an equipment vendor, I always followed through.  I never said “this isn’t my fault” and then left the customer hanging.  I’d follow through and make sure that the person to whom I referred them followed through.

If I wanted to expand this business, I would use that in my marketing.  As it is, that information has led me to start working on a new marketing approach as well as new services and ways of providing those services for my publications.

I strongly recommend this book to any entrepreneur who is either starting a new business, or hopes to expand one.

ISBN:  978-1-5955-5185-6, Hardcover, 250 pages including front and back matter.

So I haven’t missed the fax until I was asked for a number I no longer have.  I can get faxes sent to a friend’s business, but that’s annoying.

Then today I found an article titled Faxing it In on Culture11.com, which pretty much expressed my feelings.  Why use faxes at all?  The article explores why faxes still hold on when it’s so easy to scan and e-mail.

On the other hand, I must note that I still like to get snail-mail copies of contracts signed in actual ink, so in some ways I’m so last century.  We each have our hangups!

Around a year ago I started to re-evaluate my business.  I have been in business now for over 10 years, but the business has never run as I felt it should.  My wife and I sat down to discuss the way our business should go.  As we started, we both agreed that everything should be on the table, including the possibility of closing the business.  Every activity of our lives, her work, our business and our non-business activities would be on the table.

Why?  For a simple reason.  If you think you have a problem you need to put everything to the test.  If you exempt part of your activities from examination, it’s quite likely you’ll find that your problem is going to be there.  In fact, if you think about it long enough, you may come to realize that the reason you want to exclude one thing from consideration is that deep down you know it’s part of the problem and you don’t want to lose it.

So we examined everything, and amongst the changes we made we eliminated a non-profit organization I had helped found and had nurtured for years.  I didn’t want to give up on that organization.  It wasn’t part of the financial picture in any case–it was all volunteer.  But two facts stood out.  1)  It was taking up a lot of my time and 2) It was not accomplishing its mission.  So it went.  With me stepping aside, that organization died, and I suspect it will not be missed.  That’s hard to admit, but it’s a fact!

Now what does this have to do with accountability?  We conduct such re-examinations of our lives because we are pushed into it by circumstances.  We don’t do it because it’s fun.  In business, we do it because things haven’t been going well as they were, and we know we need to change.

We even have a way to do this kind of thing in business when one is truly forced to.  It’s called bankruptcy.  In bankruptcy, a business is forced to reevaluate everything, with a judge looking on to make sure everything is done properly.  Bad decisions can be undone.  It’s a painful process, but it works.  Creditors know of the possibility when they loan money, and they have the opportunity to work the probability of business failure into their calculations.  Bankruptcy is painful enough that one is motivated not to go there, but at the same time it can minimize the damage done along the way.

We are currently seeing outrage run through the country over $165 million in bonuses being paid out to employees of AIG, all after the federal government has bailed them out to the tune of billions.  Rick Santelli, who made himself famous with a rant about the mortgage bailout has spoken on this one too, and seems to think the major problem is the numbers.  We’re outraged about 165 million when billions and trillions are being wasted elsewhere.

I think he misses the point.  I think the outraged multitude, from the President on down miss the point.  We may be outraged, but we have no right to be surprised at AIG’s behavior.

When AIG and other companies were in deep trouble, we, the people, speaking through our representatives, decided they needed to be bailed out.  Don’t bother telling me you didn’t agree.  I didn’t either, but in the end, we the people sent many of the same people back to congress right after they did it.  They did it right before an election.  If we didn’t like it, we could have voted them out.

Without telling these companies that they had to reform or change their practices, we just started handing them money in order to keep everything afloat, or so we were told.  Then when some of them spent money on odd things, we started to complain.  But we honestly had and have no right to do so.

Why?  Because we rewarded them for the same behavior.  They did stupid things and their businesses were failing.  So we gave them more cash.

Consider your children and their allowances.   If you give them a certain amount of money for the week,  you tell them they should be careful how they spend it, so they still have a little bit at the end of the week.  If one child spends his money on the first day, and then wants some more on the second day, what do you do?  Well, if you’re a good parent, you let the child learn a lesson.  On the other hand, if you give him another allowance on the second day, you have no right to be surprised if he spends it all and then asks for more.  And more, and more.

The outrageous thing is that the government has given these companies large amounts of money with little to no accountability.  It has given this money to companies that were not performing well and were not behaving in ways we would regard as responsible.  It left the people who had gotten into that trouble in charge, for the most part.

A capitalist economy has a penalty for their type of behavior.  It’s called business failure.  One of the ways out of business failure is bankruptcy, which is an unpleasant business, but exacts consequences for the bad behavior.  One of those consequences is that the executives of the company who failed to do their job get examined.  At a minimum they will get a judge who will appoint someone to look over their shoulders.  They are very likely to lose their jobs.

The outrage is not in the amounts of money involved.  The outrageous thing is that people are being rewarded for behaving badly.  They are not being held accountable.  The amount is not the issue, though large amounts being used in unaccountable ways is more dangerous than small ones.

This is why I have opposed the bailouts starting with the financial system and including the auto industry.  There is a process in place for failed businesses, and it should be used.  If there is a need to protect the financial system, there might be modifications for special cases, but those modifications need to be aimed at preserving depositors, owners of vehicles, and the general system, and not at preserving the companies.

Would this mean hardship?  Absolutely.  But if we keep rewarding failure, we will inevitably arrive at that time of hardship, and the more we play around before we do what we need to do, the harder things will be when the crash time comes.

I’m told that on an earthquake fault, as plates move in different directions at different paces, pressure builds up.  If you have lots of small earthquakes, it relieves pressure.  The longer you wait, the more pressure, and the bigger the quake.  I don’t know enough geology to confirm precisely how all that works, but in a business I can tell you that it does work.  The longer you wait before you deal with basic problems, the worse things get, and the nastier the consequences will be.

This is why I’m less concerned (note that I didn’t say unconcerned) with the stimulus bill.  It’s the one thing the government can do to stimulate the economy that isn’t a reward for bad behavior is to accelerate projects that make good economic sense in the first place.  Unfortunately, not all projects are all that good, but at least they are not simply direct handouts given to people whose behavior needs modification, not encouragement.

I do enough devotional thoughts that I can’t help bringing this around to our spiritual lives as well.  No matter what the problem, the longer you keep doing the same thing, the harder it will be to change course.  Accountability is important–so important that you ought to seek it out if someone else doesn’t provide it.

I can only urge the government, through my representatives, to hold people accountable, and to be accountable.  In my own life, however, I can simply choose to be accountable, and to be honest with myself and others.

Many people think that the Christian belief in the afterlife is about the comfort of believing that loved ones are in heaven.  But Biblically and historically, there was no such absolute assurance.  In the 21st century, we like to think only about the nice aspects of the next life.

The afterlife is very much about accountability.  As Paul says in Romans 14:12 – “Every one of us will give account of himself to God.”

So many things are … a matter of accountability.