Studies have revealed that a large part of the workforce will be freelancers in the future. The freedom of being able to work from where and when you want is what freelancing is. You will be able to make more money as a freelancer than having a typical job with a fixed schedule. The thing that is limiting you from being a freelancer 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.
Keeping track of all sources of income will help you to save money when filing freelance taxes. Throughout the year, you may have various clients that you may be working with as a freelancer. It is therefore important for you to keep track of all sources of income when it comes to taxes and freelancing. Keeping track of all your customers and income will be possible if you make a spreadsheet. A designated new page on the spreadsheet should be assigned to each customer, and the projects due date, invoice sent, expected pay and payment received should be on the columns.
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. Paying taxes as a freelancer is more involving than a traditional job where your employer will deduct the tax from your paycheck. Doing freelancing work will enable you to be paid fully by your clients without accounting taxes.
It is a great idea to make quarterly payments because of this. You should set aside taxes as you get paid; this is another money-saving tip that will help you when filing freelance taxes. It is easy to take taxes for granted 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. Starting a separate bank account for tax purposes only will help in avoiding such situations. 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.
If you want to save money you should not forget about deductions. You will be taxed on your net income minus your business deductions if you are a freelancer. For this reason, you will be taxed less on your income if you have more deductions. You should track your expenses and save receipts throughout the year if you want to know your actual costs. Office equipment like computer, healthcare expenses and mileage for work-related travel are some of the expenses that you may have.