Not so fun. The reality is, being self-employed can be awesome for 11 months out of the year, and then come crashing down on your head in the form of lost receipts and unpaid estimated taxes in April. Read on for what every freelancer needs to know for your taxes.
Get Organized
First, keep good records. Go paperless, get organized and keep track of two things:-
Your business income. This is your responsibility, and it is a big one. The IRS is especially sensitive about freelancers fudging their income. Yes, you will receive 1099 Forms from clients with what you earned, but only for jobs worth more than $600. So make sure you have a good recording system, like a “Freelance Income” folder in the Money Center.
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Your business expenses. You don’t want to miss out on deductions related to business expenses, so carefully record what you spent, the date, who you paid it to and the purpose for expenses such as:
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Business cards, online ads and other tools used to promote yourself and your business
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Business insurance
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Interest paid on your business credit card or business loans
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Lawyer fees and other professional services
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Rent or dues on a workspace
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Repairs for your computer, camera and other business-related equipment
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Routine office supplies like pens, paper, staples, etc.
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Travel costs like plane and train tickets
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Business meals with clients and other entertainment reasonable for your business
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Find the Right Tax Preparer
Taxes for freelancers are complicated, so invest in a tax preparer. Look at it this way: You could pay about $300 to get your taxes done, and an accountant could easily save you $300 in fees, deductions you hadn’t heard of and more.If you decide to pay for a tax preparer, make sure they are familiar with all the ins and outs of self-employment taxes. It’s best to find one that specializes in self-employed individuals and is available throughout the year if you have any questions.
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