Financial and Legal Practices Flashcards

A US-based VA serving multiple clients is typically classified for tax purposes as what?

Answer: Independent contractor (1099)

Most freelance VAs work as independent contractors and receive 1099 forms rather than W-2s.

Which IRS form does a US client send a VA who was paid $600 or more during the year?

Answer: 1099-NEC

Form 1099-NEC reports nonemployee compensation of $600 or more to independent contractors.

What document should a VA have a new client sign before starting paid work?

Answer: A signed contract or service agreement

A written service agreement defines scope, payment, and responsibilities, protecting both parties.

An NDA primarily protects what in a VA-client relationship?

Answer: Confidential and proprietary information

A Non-Disclosure Agreement keeps confidential business information from being shared with others.

As an independent contractor, a US VA is generally responsible for paying what tax that employers normally split?

Answer: Self-employment tax (Social Security and Medicare)

Self-employed individuals pay the full self-employment tax covering both employer and employee portions.

What is the main purpose of a VA sending an invoice to a client?

Answer: To formally request payment for services rendered

An invoice itemizes work completed and requests payment by a stated due date.

Why should a VA keep separate records of business income and expenses?

Answer: To accurately report taxes and claim deductions

Good bookkeeping supports accurate tax filing and lets the VA claim legitimate business deductions.