Tips For Saving Money That Will Help You When Filing Freelance Taxes
According to research, a large part of the workforce will be freelancers in the near future. Freelancing means that you can work from where and when you want. As a freelancer, you will make more money than having a regular job with a fixed schedule. What may be standing between you and your freelancing job is taxes. You will not find taxes as complex as they seem when you have some knowledge. Money saving tips that will help you when filing freelance taxes have been outlined in this article.
You will be able to save money if you keep track of all sources of income; this is one of the tips. As a freelancer, you may have multiple clients that you may be working with throughout the year. It is therefore important for you to keep track of all sources of income 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. Making quarterly payments will help you to save money. Being a newbie freelancer, you may not know how to pay taxes. Unlike with traditional employment where the tax will be deducted from your paycheck by your employer, paying taxes as a freelancer is more involving. The jobs you will do as a freelancer for your clients will allow you to be paid in full without accounting for taxes.
This is the reason why making quarterly payments will be a great idea. Another money-saving tip to help you when filing freelance taxes is setting aside taxes as you get paid. It is easy to take taxes for granted if you have a traditional job. Failure to plan taxes properly may make freelancers find it tough at certain times. Such circumstances can be avoided by starting a separate bank account for tax purposes only. To avoid you being tempted to spend the money; you should transfer part of the money to a separate bank account for taxes when you are paid for a project.
Not forgetting about deductions is crucial if you want to save money. If you are a freelancer, you will be taxed on your net income minus business deductions. Hence the more deductions you will have, the less your income will be taxed. You should track your expenses and save receipts throughout the year if you want to know your actual costs. Some expenses that you may have are office equipment like computer, healthcare expenses and mileage for work-related travel.