Are you self-employed? Do you work as an independent contractor? Here’s a complete guide on how to do taxes as a freelancer.
It’s either that time of the year or that time of the quarter. That’s right! It’s tax time.
When you’re self-employed, filing your taxes is often a daunting task plagued with the fear of making a mistake. Luckily, it doesn’t have to be that way!
Let’s talk about how to do taxes as a freelancer so you don’t have to worry!
How to do Taxes as a Freelancer
Doing your taxes as a freelancer is stressful, but with a few easy steps, you can rest easily. Assuming you have saved a portion of your income for tax time, here is what you need to do.
Get Your Paperwork Ready
This is the only part that self-employed folks often hate more than filing. It’s time to get out all of those receipts you’ve kept in your filing cabinet and email inbox.
Remember, as a self-employed individual, you’re entitled to deduct any expense that you needed for your business from your income. This could be more than you’re expecting.
Did you need a cell phone and internet to perform your basic duties? If so, those bills can be deducted as freelance business expenses.
Know Your Numbers
Before you enter the filing stage, be sure that you’ve added up all of your income and expenses.
If you’ve used an app or a spreadsheet throughout the year to track these, then you’re ahead of the game. Make sure you know your final totals so you know everything adds up to the right amount when you’re done.
Pick a Filing Method
Whether you’re filing with an accountant or online, you should make your decision once you have all of your documents in order.
If you are filing solo, be sure to take extra precautions with your selections. This not only includes income and expenses but also everything from your marital status onward. Tax forms are the last place that you want to make a mistake.
If this is your first time filing as a freelancer, definitely do your research on more than deductions to avoid any trouble.
Report All Income
This is the most important tip of them all. Penalties for tax evasion are not to be taken lightly.
I know that many people think of freelance taxes as punching in a handful of 1099 forms, but for income that doesn’t come with one, it is still absolutely critical that you report your income.
Cash income related to your business that doesn’t come with a 1099 form needs to be declared. You can make it easier with online help from thepaystubs.com and their guide to reporting cash income.
Make Sure You Have the Cash
This one should go without saying, but you need to expect the worst in order to be happy with the results. Before tax season begins, get an estimate of how much you’ll owe, and prepare to pay more than that just in case.
Now that you know how to do taxes as a freelancer, you should be prepared to file. Just be absolutely certain that you’ve done your research, you have what you need, and you aren’t leaving anything out before you click submit.
Keep checking out our finance blog for more information on taxes, and you’ll have nothing to worry about!