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Things That Will Help You Save Money When Filing Freelance Taxes
Studies have revealed that a large part of the workforce will be freelancers in the future. With freelancing, you have the freedom of working from where and when you want. You will be able to make more money as a freelancer than having a typical job with a fixed schedule. Taxes is what may be standing between you and your freelancing lifestyle. Having some knowledge will make taxes seem easier than you thought. In this article we have described the money-saving tips that will help you when filing freelance taxes.
One of the tips that will help you save money is keeping track of all sources of income. As a freelancer, you may have multiple clients that you may be working with throughout the year. It is therefore important for you to keep track of all sources of income when it comes to taxes and freelancing. Making a spreadsheet will help you to monitor all your clients and your income. The projects due date, invoice sent, expected pay and payment received should be on the columns and each client should have a designated new page on the spreadsheet.
Knowing where the payment process of the projects you have done for various customers are will be possible with this format. If you want to save money should make quarterly payments. Being a newbie freelancer, you may not know how to pay taxes. It is more involving to pay taxes as a freelancer unlike in traditional employment where the 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. Having a traditional job will make it easy for you to take taxes for granted. There comes at a time when freelancers find it tough if they will not have planned their taxes properly. Such circumstances can be avoided by starting a separate bank account for tax purposes only. You can transfer some money to the separate bank account for taxes when you are paid for a project to prevent its usage.
You should also not forget about deductions if you want to save money. If you are a freelancer, you will be taxed on your net income minus business deductions. For this reason, you will be taxed less on your income if you have more deductions. Tracking your expenses and saving your receipts throughout the year will enable you to know the actual costs. The following are some expenses that you may have; office equipment like computer, healthcare expenses and mileage for work-related travel.