![]() “Freelance taxes are complicated,” Debra explains. Unless accounting’s your specialty, this is a service worth paying for-at least in your first year. But it doesn’t hurt to double-check that number with your accountant, as the percentage a freelancer owes varies based on a lot of factors. The last thing you want is to realize at the end of the year that you owe more than you saved.Ī good rule of thumb is to set aside around a third of each paycheck you receive for taxes (and make sure your rates are high enough that you’re still making decent money after that). In addition to paying federal income tax based on how much you make, you also owe a self-employment tax, and may owe additional state income taxes and sales tax besides. Many a newbie freelancer has learned about the reality of freelance taxes too late. Logging all your business expenses into an accounting software or spreadsheet is much easier if they’re all in one account. It makes your record keeping easier, and provides a little bit of extra liability to protect your personal assets from business losses.Ĭonsider also applying for a business credit card for the same reason. Create a Separate Business Bank Account.Ĭreating a separate bank account for your freelance business is a quick and easy way to separate your personal and business finances. If you live in another country, find an accountant in your own country to walk you through anything specific to your nation’s laws. Note: a few of these tips are specific to freelancers working in the U.S. Here are the most important ten steps to take to get off on the right foot. To help out those in the early stages of building a freelance business, I talked to my personal CPA (also my mom), Debra Hicks of Pattillo, Brown, & Hill. Getting accounting right from day one can make a huge difference in how successful you are in your first year as a freelancer (and beyond). One of the big ones is that you have to figure out the accounting side of things. You can work from home, create your own schedule, and gain some control back over your career. For some people, freelancing is a great option. As the world changes and a growing number of people are forced out of their former careers, many are exploring new ways of working.
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1/31/2023 09:13:49 pm
Thanks for sharing this wonderful information! You can now use ANNA Money with Google Pay™. It’s the fast, simple, and secure way to pay at millions of places – on sites, in apps, and in stores. With Google Pay there’s no need to dig for your cards – you can pay quickly and easily with the device that’s already in your hand.
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