Image source: Getty Images All of these need a place on your list. Key points Freelancers need to pay estimated taxes, so it’s important to keep money in savings to pay those bills. Freelancers can deduct business expenses, so you’ll need solid records of what yours entail. Freelancers can often benefit from the help of a skilled tax professional. Check out our picks for best tax software If you’re planning to go freelance in 2023, you’re in good company. A recent survey from Fiverr found that 73% of Americans plan to do freelance work this year in some capacity. Going freelance could work to your benefit in many ways. It might open the door to a higher income, more flexibility, and the opportunity to do work that’s actually interesting and meaningful. But if you’re going to go freelance this year, there are certain tax moves it pays to tackle. Be sure to add these three moves to your list. 1. Start automatically adding money to your savings account One of the trickiest things about being a freelancer is not having money deducted from your wages like salaried workers do. Rather, it’s on you to pay taxes to the IRS as you go, and those are typically paid on a quarterly basis. To avoid running into problems, it’s a good idea to set up an automatic transfer to your savings account every month. That way, money for those estimated tax payments will land there automatically, and you’ll be less likely to run into a situation where it’s time to pay the IRS a portion of your earnings and you don’t have the cash. 2. Establish a good system for keeping records When you work in a freelance capacity, you’re allowed to deduct the different expenses you incur that make it possible to do your job. This means that if you travel to see clients, you can deduct your flights and hotel rooms. If you buy certain tools to do your work, you can write off their cost. It’s important to develop a system for keeping track of your business-related purchases so you know what to write off when you file your taxes. And don’t just assume you can fall back on your credit card bills. You might need to back up your claims if the IRS decides to further scrutinize your tax return, so keeping original receipts on file is usually best. In fact, one thing you may want to do is find a way to scan your receipts and records, and then store them electronically. Physical documents and receipts can get lost or fade, so an electronic record-keeping system is probably your best bet. 3. Get yourself a great accountant Going freelance could add several layers of complexity to your tax situation. That’s not a reason not to do it — but it is a reason to get yourself a seasoned accountant . To be clear, you don’t just need an accountant for tax-filing purposes. You should also consult […]
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