Freelancing certainly has its perks.
Filing taxes is not one of them.
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How Do You Pay Taxes as an Independent Contractor?
The advice below will vary if youve chosen a business structure like an S-Corp or an LLC.
Since sole proprietorships are the default for most freelancers, well focus on what those taxes look like.
First things first: making quarterly payments.
Estimated Quarterly Taxes: How Much Do you should probably Set Aside?
The client doesnt withhold any money to cover taxes or benefits like they would for their employees.
However, you might also pay by phone or snail mail; theaddresswill vary depending on your location.
Thats because employers pay the other half.
Yes, freelancers, you actuallydopay more because you dont have an employer splitting the bill with you.
The good news is, this percentage is levied against yournetincome.
Meaning, you calculate your independent contractor taxesafteryou take out your eligible deductible expenses.
(More on that in a minute!)
For freelancers, this means youll need to be diligent about recording every single penny you earn.
If not, contact your client and ask them to correct it.
Do You Still Get a W-2?
Not all freelancers run their own business full time.
Some may do it as a side hustle part-time in addition to their part- or full-time job.
If thats you, your employer will still need to file a W-2 for you.
Youll receive it sometime in February each year, and youll need your W-2 to file your return.
What Can You Deduct as a Small Business Owner?
Should You Hire an Accountant?
The internet has made filing taxes a whole lot easier.
You have a W-2 job (or three) alongside your freelance business.
An accountant can help you work out exactly how much you owe.
Hiring a professional can end up saving you money, even after factoring in their charges.
Youve elected a more convoluted business structure.
While most freelancers operate as sole proprietorships, there can be benefits to incorporating a growing freelance business.
And theres even more such paperwork at tax time.
You just dont want to deal with it.
Many accountants charge a few hundred dollars to make Uncle Sam happy.
This is money well spent, for freelancers and for everyone.
In many cases, the CPA fees are totally worth it.
More From The Penny Hoarder:
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She is the host of the Buzzsprout and Beyond the Dollar podcasts.
