Be clear about what type of return you have to file. If your freelance business is an LLC or you haven’t established a separate business yet, you will report your income on your individual return. If you are a multiple member LLC, partnership, or corporation you will need to file a separate return for your business. Don’t forget state and local forms also.
You are responsible for self-employment tax and income tax. If your business generates more than $400 annually, you have to pay self-employment tax in addition to income tax.
Make quarterly estimated tax payments. Let last year’s return be a guide for how much tax you should set aside and pay each quarter. Payments are due on April 15, June 15, September 15, and January 15.
Itemize and record your business expenses. While there are available tax deductions, be aware of the rules about them. You can generally write off expenses from; things you use exclusively in operating your business, and things related to the exclusive business use of the place where your business operates.
Keep good records. It will help save stress and time whether you do your own taxes or get professional help.
Hire a CPA. A CPA will be able to ensure that you are taking advantage of all possible tax deductions and credits and give you advice on how to structure your business and personal finances to lower your future tax bills. Plus, a CPA’s professional fees are tax deductible, so the benefit you’ll receive from working with a tax and financial expert will far outweigh the cost.
Contact Jellison CPA if you have questions about your taxes as a freelancer/self employed worker.