Freelance Tax Tips

Let’s start out with a little disclaimer right off the bat: I am in no way shape or form a tax expert. I’m just sharing my knowledge about freelancing and taxes.

Taxes are a fact of life that we all deal with, but especially as freelancers. Whether your a freelance graphic designer, web developer, dog walker, hair stylist or basket weaver, your tax obligations will be waiting for you. It’s easy for new freelancers to overlook this little gift from the government, but there are ways to keep on top your tax responsibilities and come out unscathed after April 15th.

Find an Accountant

Find one, now. Finding an accountant to prepare your taxes will put your mind at ease and help save you from being audited. Make sure to keep all business receipts and keep track of any business purchases (computers, printers, office furniture). An accountant will know how to utilize these expenses into deductions as well as your office dimensions, rent and utility costs. Yes, you can deduct all of this! Your accountant will be your new bff come tax time.

Paying Taxes Quarterly

Paying taxes quarterly (every 3 months) can help tremendously with keeping the taxes you owe in check. Instead of having one large lump sum, you can make payments through out the year, keeping your sanity and savings account in tact. Your new bff, the accountant, can help set this up as well.

1099 Tax Forms

If you’re working as an independent contractor for an extended period of time with one client, you can expect to receive a 1099 from said client come tax time. In a nutshell, a 1099 is a form/record of all the money you made working for that single client. There are no tax deductions included on a 1099 form (such as social security, federal and state taxes). Again, an accountant can explain this much better.

Save, Save, Save

Since I’d only been a full-time freelancer since June 2009, this year I opted to estimate and save enough money to cover my taxes. Some veteran freelancers set up an entirely separate savings account just for tax purposes. While this method might work for some freelancers, It’s not one I recommend, since it’s difficult to estimate just how much you’ll owe since it all depends on what you’ll make that year. I personally won’t be doing this again, however if your great and socking money away in an account you won’t touch and have a good idea of what you’re going to owe, more power to you.

In Conclusion:

Paying taxes suck, let’s be honest, but there are many avenues freelance graphic designers, like me and you, can take to make paying them suck less. This being my first year being on my own and dealing with my taxes all by my lonesome, I feel like I’ve learned a lot and definitely know that I’ll be seeking the help of an accountant the next time around. Getting help from the pros is never a bad thing, and isn’t that the motto that we graphic designers, web developers, dog walkers, hair stylists and basket weavers hinge our businesses on? Bottom line, if you’re in doubt about your taxes, talk to an accountant and leave this tax business to the professionals.