Taxes and Accounting Tips for Freelancers

American

Freelancers Are Business Owners

Freelancing comes with lots of perks; flexible hours, the option to work from home and not having a boss is kind of nice. One area that is a bit of a headache is that as a freelancer, you are usually the one responsible for your own accounting and taxes. For some people this can seem stressful and downright scary. No one wants to get in trouble with the tax authorities for filing incorrectly or paying too much in taxes. Then there is the monthly bookkeeping that needs to be done. Hiring a bookkeeper and accountant can be expensive. It may seem daunting at first, but taking care of your own taxes and accounting isn’t that bad, especially if you set yourself up to have an organized system.

To make it easier, we put together our top tips for freelancers doing their own taxes and accounting

1. Setup A Receipt Tracking System

Any money you spend on your freelance business needs to be tracked. From the coffee you bought for a client to your website subscription costs. Having a system that helps you stay on top of your receipts will save you lots of time and stress at tax time. There are receipts scanners and expense tracking apps that can make this a whole lot easier. An expense tracker like Fresh Books, make this process easy and it a lot cheaper than hiring a book keeper.

2. Monthly Maintenance

Give yourself one day a month to spend an hour or two making sure your monthly books are in order. Always, check monthly statements to make sure you are not missing any monthly payments or were overcharged somewhere. Finding out about overpayments 5 months down the road is never pretty, spending an hour religiously each month will help you avoid that sort of pitfall. Setup a reminder in your calendar that repeats itself if you need to but make sure you never skip that block of time. You also want to make sure all your clients have paid you by month end or else you need to start chasing payments and charging late fees.

3. Know Your Tax Deductions

A freelancer is a small business which means you can write off expenses. Discussing this with an accountant is advisable. You can write off portions of your home office space and car payments within reason, an accountant will be able to tell you what is advisable in your situation. Once you have this explained, you can be confident in repeating it for future tax filings. Don't forget about charity donations. Donating to a charity is a tax write off so make sure you keep your receipts (see step 1).

4. Predict Your Tax Bill Ahead of Time

If you have steady income and consistent expenses you can quickly calculate how much money you will need to set aside come tax time. Break it down to a monthly amount and set up a payment plan for yourself so that you are never alarmed come tax time.

5. Don’t Forget About Retirement

Contributions to your retirement fund are a deduction, so why not do it? Also, there are no retirement pensions waiting for you my freelancing friend so you have to set that aside yourself every month.

6. Organize Your Income and Expenses

Keep your income and expenses organized under one roof. There are accounting softwares like Quickbooks available or a simple Excel spreadsheet can do. Try having income come under one payment method if possible. Freelancers that accept payment through Paypal, check, etransfers, freelance sites etc will be more likely to miss recording a payment since there are several places they need to look. Having payments go through one process like Paypal, makes things easier to track. Paypal lets your send out invoices, receive payments, record late payments, send reminders and then print a monthly summary.

We hope that helps you get your accounting and tax systems in tip top shape this year. See our blog for more freelancing tips.

Posted in Freelancing For Beginners, Freelancing Tips on Aug 23, 2017

Follow Sagegroupy

    Recent Posts

  • Use Instagram Stories to Promote your Freelance Business

    Posted in Freelancing Tips, Business Tips on Nov 19, 2018

    Instagram stories have become an essential part of marketing on Instagram and they are a fantastic way for your followers and potential clients to get to know you. If you are a freelancer working in the creative industry, you don’t want to miss out on this fun and effective marketing method. Take a look at how to use Instagram stories to boost your business profile.

  • Navigating the Holiday Season as a Freelancer

    Posted in Freelancing Tips on Nov 12, 2018

    Whether they plan to take time off or continue to work hard, freelancers have to make decisions about their business and navigate the holiday season on their own. What can freelancers do to prepare for the holiday season? Whether you’re planning to take some time off or use the holidays to make some money, here are some tips to help you get through this crazy time of year.

  • Do I have to Hustle my Brand to Succeed?

    Posted in Freelancing For Beginners, Freelancing Tips on Nov 05, 2018

    What if you don’t want to spend a lot of time hustling your brand and would rather focus on just doing the work that your clients need, are you doomed to fail as a freelancer? If this big question is on your mind as you debate whether or not freelancing is for you, we have good news and bad news. The bad news is: you do have to do some marketing, it cannot be avoided if you want clients to find you. The good news is: marketing yourself doesn’t have to be the difficult hustle you think it is and you aren’t doomed to always be selling yourself.

  • Routes and Requirements to Becoming an Online Educator

    Posted in Resources on Oct 26, 2018

    Are you passionate about education but don’t want to be tied down to a specific location? If so, becoming an online educator might be the right fit for you.

  • Email Marketing for Freelancers

    Posted in Resources, Freelancing Tips, Business Tips on Oct 19, 2018

    Email marketing may seem pretty old-school but it is still one of the most effective ways for small businesses to reach other small businesses, and it is a great way for freelancers to keep themselves fresh in the mind of potential clients. See what an email marketing strategy needs to make it successful.

  • What do Clients Want?

    Posted in Freelancing Tips on Oct 12, 2018

    When you are competing against the growing ranks of talented freelancers, how do you stand out from the pack and land the jobs you need? Here's what clients are really looking for.

  • The Top 5 Reasons Why Freelancing is Ideal

    Posted in News on Oct 05, 2018

    If you're thinking of making the leap from traditional employment into freelancing this list might help you make the transition, check out the top 5 reasons why we think freelancing is ideal.

  • How to Get Started as a Freelance Business Consultant

    Posted in Freelancing For Beginners, Freelancing Tips on Sep 28, 2018

    Do you have the interest, experience and work habits required to be a freelance business consultant? If you have years of business experience and are thinking of taking your expertise out of the office and into the freelance world, here are some steps you can take in order to build your own freelance business consultant business.

  • Get and Keep Clients Onboard with these 5 Steps

    Posted in Freelancing Tips, Business Tips on Sep 21, 2018

    A solid onboard process and package can save you time and help you screen out projects that do not fit within your business parameters. Even though each project is unique, you can create a process that will give each of your clients the necessary information about working with you and enable you to gather important information from them. We've narrowed down the process of getting and keeping clients onboard to 5 easy steps that can be adapted for any freelance business.

  • Promote Yourself as a Freelancer

    Posted in Freelancing For Beginners, Freelancing Tips on Sep 14, 2018

    One of the most important things you can do in order to attract clients and get yourself hired as a newly-minted or seasoned freelancer is to promote yourself. If you have the skills clients need, they will hire you - but only if they can find you first! Here are some tips you can use to promote your business.


Tags


Comments

Please sign in to comment!