If You Read One Article About , Read This One

Things That Will Help You Save Money When Filing Freelance Taxes

According to research, a large part of the workforce will be freelancers in the near future. The freedom of being able to work from where and when you want is what freelancing is. Being a freelancer will enable you to make more money than having a regular job with a fixed schedule. What may be standing between you and your freelancing job is taxes. With a little knowledge, however, you will not find taxes as complicated as they seem. In this article we have described the money-saving tips that will help you when filing freelance taxes.

One of the tips that will help you save money is keeping track of all sources of income. You may be working for various customers throughout the year as a freelancer. Keeping track of all sources of income is thus vital when it comes to taxes and freelancing. Making a spreadsheet will help you to monitor all your clients and your income. The projects due date, invoice sent, expected pay and payment received should be on the columns and each client should have a designated new page on the spreadsheet.

Knowing where the payment process of the projects you have done for various customers are will be possible with this format. You should also make quarterly payments if you want to save money. You may not know how to pay taxes if you are new to freelancing. It is more involving to pay taxes as a freelancer unlike in traditional employment where the employer will deduct the tax from your paycheck. As a freelancer, you will be paid in full for the jobs you will do for your customers without taxes being accounted for.

For this reason, making quarterly payments is an excellent idea. You should set aside taxes as you get paid; this is another money-saving tip that will help you when filing freelance taxes. Taking taxes for granted is easy if you have a traditional job. There comes at a time when freelancers find it tough if they will not have planned their taxes properly. Such circumstances can be avoided by starting a separate bank account for tax purposes only. When you are a paid for a project, you can transfer some amount of the money to the separate bank account for taxes so that you will not be tempted to use the money.

You should also not forget about deductions if you want to save money. You will be taxed on your net income minus your business deductions if you are a freelancer. Hence the more deductions you will have, the less your income will be taxed. If you want to know your actual costs, you should track your expenses and save receipts throughout the year. Office equipment like computer, healthcare expenses and mileage for work-related travel are some of the expenses that you may have.

Leave a Comment