More people than ever before are self employed, creating their own businesses, working as contractors for others and often working straight out of their home. This is due to both the spread of Internet technology as well as the current state of the economy, where so many large companies and industries have undergone downsizing and have been unstable. 

As tax season for 2010 is upon us, it's important to think about some of the legal ramifications for being self employed. What exactly do you have to do on your taxes, how can you ensure you report everything properly and what are some tips and guidelines?

Of course everybody wants to maximize their deductions when it comes to their taxes and this is certainly true for the self employed. However, some deductions may be harder to come by than you think. For example you cannot just deduct your entire rent or phone or Internet bill if you work from home. 

Instead you need to make careful deductions based upon what percentage of your bills goes solely to your home office needs. Transportation and car costs are fairly easy to deduct, but others may be harder to come by, so be sure to follow step by step tax guidelines properly. Other potential deductions include health care that you purchase on your own as a self employed person and other necessary expenses for running your business. 

Taxes can be very complex for the self employed, because there are many unique features to deal with. Since you have to report your own income and pay taxes on it, you have to prepare year round by saving money to put away for tax purposes so you won't be in a hole when tax season comes. Remember to be careful with what you try to deduct while still maximizing the money you can see returned to you.