Freelancing offers a world of freedom when it comes to being your own boss, but with respect to taxes, this luxury can come at a cost. Being self-employed means you don’t have taxes automatically deducted from your paychecks, so you will need to stay on top of your financials.
Not to worry, though, as accounting services in Miami is here to help.
Here are our 3 best tips:
Because self-employed individuals are taxed on their income minus qualifying business expenses, it is important to retain paperwork including check stubs and receipts. Having an organized system in place will make things easier come tax time because you will be able to quickly and easily obtain the documents needed to determine your tax burden.
When a large check comes in, avoid the temptation to spend it all. Keep in mind that the government is due its share. Putting aside Uncle Sam’s payment now will cause less stress come tax time.
In an effort to avoid the surprise of a substantial tax bill as well as unfriendly penalties, it is important to consider the need to pay quarterly tax payments. Using an Excel spreadsheet or one of the readily available software programs, be sure to track all of your income and expenses.
If you paid more than $1000 in the previous tax year, you will need to pay quarterly taxes in the current year. Additionally, if you expect to pay more than $1000 in taxes in the current year, you will also need to make quarterly payments. If you paid no taxes or received a return in the previous year, you may not have to pay quarterly taxes in the current year.
You can see that there is a level of responsibility that comes with the freelance status, but with a little planning from a Miami tax preparer, this need not be a burden for the self-employed.