Maybe you drive Uber or deliver for Postmates. Perhaps you do freelance writing or graphic design. No matter how you earn your bread, you have to give the IRS its cut.
To do this, it’s important that you learn how to pay taxes as a freelancer.
These tips will teach you how to do that properly.
Pay Your Estimated Taxes
As a freelancer, you are responsible for paying estimated taxes every year. Outside of being a requirement, this also makes paying taxes easier for you and more organized.
When you pay your estimated taxes, the rest of your tax prep will be smooth sailing by the time April 15 approaches. You can pay your estimated taxes on a third-party site that processes payments to the IRS.
You should figure out how much money you want to pay in estimated taxes. Be sure that it is at least 25 percent to be on the safe side.
If you pay too much in estimated taxes, the worst that will happen is that you will receive a nice refund after you file.
Get Some Software Assistance For Record Keeping
Because there are a lot of tax software options, there is no reason to not stay organized with your taxes.
People have different preferences about which ones they use, but you should have one that you use even if it is just to keep accurate records. Even freelancers that hire somebody to do their taxes often use tax software throughout the year to keep everything organized.
The check stub maker platform can also help you keep track of records. You might want to use this product if you pay 1099 contractors as part of your business.
Make Sure You Keep Track of Deductions
Overlooking deductions can cost you a lot of money when it is all said and done. Things like equipment purchases, gas mileage, and work lunches and be written off on your taxes.
If you haven’t done your research into deductions, you are probably leaving some money on the table and paying more taxes than you have to. If you are going to take some deductions, you need to be organized with it so you can prove the expenditure and that it is a legitimate deduction.
Hire a Professional
Tax processes and laws can get complicated, so you should hire a professional to help you prepare them.
Even just hiring somebody to answer some questions can be valuable. It lets you focus on your expertise while getting help from a professional that does this for a living.
It is far better to pay a little bit of money on your tax prep so that you can avoid tax penalties or get audited by the IRS.
Learn How to Pay Taxes as a Freelancer
Freelancing is amazing, but you also have to think about more obligations than you would if you work for somebody else. You need to learn how to pay taxes as a freelancer so you can address these obligations and learn how to conduct business.
Check out more of our columns and articles every day so you can keep learning more.