Virtual Assistant Financial and Legal Practices 2 — Questions and Answers
Question 1: A US-based VA serving multiple clients is typically classified for tax purposes as what?
- W-2 employee
- Independent contractor (1099) (Correct answer)
- Corporate officer
- Statutory employee
Correct answer: Independent contractor (1099)
Most freelance VAs work as independent contractors and receive 1099 forms rather than W-2s.
Question 2: Which IRS form does a US client send a VA who was paid $600 or more during the year?
- 1099-NEC (Correct answer)
- W-2
- W-4
- 1040-EZ
Correct answer: 1099-NEC
Form 1099-NEC reports nonemployee compensation of $600 or more to independent contractors.
Question 3: What document should a VA have a new client sign before starting paid work?
- A signed contract or service agreement (Correct answer)
- A verbal handshake only
- A social media post
- A blank invoice
Correct answer: A signed contract or service agreement
A written service agreement defines scope, payment, and responsibilities, protecting both parties.
Question 4: An NDA primarily protects what in a VA-client relationship?
- Confidential and proprietary information (Correct answer)
- The VA's hourly rate
- The client's tax refund
- The VA's vacation days
Correct answer: Confidential and proprietary information
A Non-Disclosure Agreement keeps confidential business information from being shared with others.
Question 5: As an independent contractor, a US VA is generally responsible for paying what tax that employers normally split?
- Self-employment tax (Social Security and Medicare) (Correct answer)
- Corporate franchise tax
- Estate tax
- Import duty
Correct answer: Self-employment tax (Social Security and Medicare)
Self-employed individuals pay the full self-employment tax covering both employer and employee portions.
Question 6: What is the main purpose of a VA sending an invoice to a client?
- To formally request payment for services rendered (Correct answer)
- To file the client's taxes
- To advertise services
- To cancel the contract
Correct answer: To formally request payment for services rendered
An invoice itemizes work completed and requests payment by a stated due date.
Question 7: Why should a VA keep separate records of business income and expenses?
- To accurately report taxes and claim deductions (Correct answer)
- Because clients require it weekly
- To avoid signing contracts
- To increase hourly rates automatically
Correct answer: To accurately report taxes and claim deductions
Good bookkeeping supports accurate tax filing and lets the VA claim legitimate business deductions.
Virtual Assistant Financial and Legal Practices 2
A US-based VA serving multiple clients is typically classified for tax purposes as what?