In the age of a booming gig economy, more people identify as a freelance worker or sole proprietor. The tax process of W-2’s and tax software is slowly phasing out as the way to go. Tax accountants with Prescott Accounting answer questions and guide a freelance worker through the tax process.
No Payday Deductions
Paydays come and go with a level of relief. However, because someone does not pay taxes out of their wages does not exempt them from owing the IRS and waiting until April is a headache waiting to happen. Paying them every quarter is best practice by estimating what you owe. It is ideal to pay more than getting hit with a bill in the Spring that breaks you. Holdsworth Chadd Fuller CPAs can assist you.
If an employer does not pay income taxes, Social Security, and Medicaid, it is up to you. Twenty-five percent of the total earned set aside is a good rule of thumb. If you doubt your math, having a tax accountant with handy is helpful.
- Two Accounts Help
Doing business by a credit card helps keep track of expenses versus income. A business-specific bank account helps with keeping up with income versus expenses. Using one account to keep tabs on both will confuse you and lead to chaos come tax season. In both cases, it keeps business and personal accounts entirely separate.
- Itemizing Helps
Expenses and deductions mean far more to an independent taxpayer than when simply an employee. Itemizing becomes a best friend rather than unnecessary for a freelance worker or sole proprietor. Deducting travel, equipment, or cell phones bills is not only possible but also rewarding. Never miss out on tax breaks. Deductions are yours for the taking.
- Help by a Pro Is Best
Tax software is great for estimating, but in the end, a personal accountant in human form is the best policy. Planning quarterly payments, expenses, and deductions are easier with Prescott Accounting at your side. In the end, money saved and itemization pays a tax accountant plus some.
