One thing about being a small-business owner or a freelancer is you must face the dreaded idea of taxes much differently than your on-the-books counterparts within the workforce.
For those who do not know, most freelancers and some small-business owners work from a different tax document than others in which we do not get taxes taken out initially when paid and are instead required to make estimated payments throughout the year to compensate.
This may not sound bad at all and honestly, it truly isn’t, but for first-timers it can be really scary.
Below are some tips to help you get started with getting yourself up to speed with being in charge of your own tax destiny:
There are enough pieces to reference how to take on taxes from places like Freelancers Union, ELance and Upwork that can help you initially get the lay of the land when it comes to taxes. Being the slightest bit informed can help immensely moving forward. Also, a wonderful book that helped me out (although some information may be slightly outdated–but useful nonetheless) is “Get a Financial Life” by Beth Kobliner. I would definitely read it no matter what age.
If you have used online tax programs before and are new to this type of tax work, you may want to take a step back and reconsider doing it how you are used to. If you know taxes well, then maybe you can swing it, but most would advise new freelancers and small-business owners to seek help from a professional. Why? It’s easy to mistake something on tax software as a deduction you qualify for and no one wants to make a mistake and be audited
You want to find a CPA (Certified Public Accountant) who specializes in freelancers–as it’s a whole different tax world for us. It’s as simple as going on Google and typing in “CPA’s who work with freelancers,” and you will be able to find local CPA’s who can help, but make sure to read their reviews and find one you think you can trust.
Before finding the perfect CPA, make calls to the ones you feel most confident with and see what they can tell you. Some may offer a free consultation to get started and others can offer free help during these consultations like typing up envelopes to send your estimated tax payments out in, looking over paperwork and discussing your option for deductions. Ask as many questions you can while you aren’t on the clock for payment!
Most would suggest making quarterly payments with taxes, but if that is out of the question or you don’t make enough then make sure to at least make the last payment of the year which is usually due before January 15th of the next year.
What is your approach to taxes? Share!
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