Are you new in the world of freelancing and cringing about how to manage your overall personal finance including your income, expenditure and overwhelming taxes? Have no worry; it’s not that complicated. You can surely manage your money and finance with the help of an income tax consultant or professional accountant.
Let’s have a look at the tricks discussed for the new freelancers like you.
Get easy with the new payment style – This new payment style may be a bit erratic to you, but there is nothing to be confused – trust me. There is no specific type for paycheck disbursement. So start writing out on calendar when your regular bills are due. When you start working with new clients and make new financial decision, always keep your financial obligations in mind.
Keep track of finances – Do you keep track of your spending and saving? As a freelancer, you must start doing so. It’s simply indispensable for practical reasons. Keeping track of your finances would help you understand how your business is doing and this would help you while filing your annual tax return and paying quarterly estimated tax. Moreover, the IRS requires the self-employed individuals to maintain their financial records for at least initial 3 years.
Know the fundamentals on taxes – You must be well informed and conversant about your taxes. You need to pay quarterly estimated taxes before filing annual return by the deadlines determined by the IRS. Since you’re a self-employed, no one is responsible to withhold your taxes. Quarterly estimated taxes may include state and federal income tax, sales and use tax and any business as well as local tax. Therefore, you must do a good research which taxes you’re subject to. Failing to pay such taxes throughout the year may require you to face with massive tax bill at the end of the year and that may also cause severe cash flow issues. Have all receipts and financial records documented and take care of the tax deductions you’re entitled to. Visit IRS website; here you’ll find important tax-related resources and all the essential tax forms you require for filing taxes. You’ll also get necessary and updated information on the changes that may impact your filing. You may surf the web to get more information specific to self-employed and freelancers. You’d also come to know about imminent tax deadlines.
Talk to an income tax consultant – Unless you’re doing as a freelance accountant, it is impossible for you to know the nitty-gritty about tax changes for the freelancers and how to file tax return. You may ask around to known freelance networks about referrals. Make sure your chosen tax consultancy firm is registered with IRS Office of Enrollment and also check their BBB (Better Business Bureau) rating. It is, once again, highly recommended that you talk to a tax specialist and work with her/him as your payments start coming in.
These are just a few of many tax tips especially useful for the freelance business owners. You can get more help from the web.