Tuesday, March 12, 2013

Top 10 Tax Tips For The Self-Employed

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(Photo credit: patrick h. lauke)
Self-employment is a tough road to go down, but luckily there are a few things that you can benefit from. Self-employed individuals will have a different tax status to those who are employed by someone else. As a result, you are going to want to take a look at your taxes and see what you can do when it comes to making the most out of your situation.

Determine Your Net Income


Your net income is the income that you receive after all of your business expenses have been deducted. This can be done after a year of working to determine what you are most likely to earn.

Keep a Record


Make sure to keep a record of everything that you earn. Knowing how much you earned every week or month will allow you to figure out the proper rate at which you will be taxed.

Calculate Estimated Tax


Try to determine what percentage of your tax you are going to have to pay. Deduct this from your net income and you will have an idea of how much you owe.

Expenses for the Home Office


If you have a home office, then you will be able to make it a tax-deductible business expense. Remember that you are not able to deduct more than your net business profit.

Get an Accountant


Having someone to take a look over all of your expenses is a great thing. On top of this, you can also deduct what you pay from your accountant as a business expense.

Remember to Report


Making over $600 from a client means that you are going to have to report it to the IRS. When this happens, your client is going to give you a 1099-Misc.

Set Up a Separate Account


Get a separate account where you will be able to put all of your estimated taxes in. This is much easier than scraping for the money at the end of the year.

Keep a Track of All Business Expenses


Business expenses can include anything that you use in order to carry out your business. These can include your computer, your desk, your phone and your Internet connection. Make sure to keep a track of everything in this regard.

Remember to Pay Quarterly


You do not pay your taxes on a yearly basis. Instead, you pay every quarter of the year. This means you have to make sure that you have everything organized.

Keep Everything Together


Get files for all of the necessary expenses and tax records that you are going to need. Organizing all of this properly will ensure that you know what is going on when the time comes to pay.

Being self-employed can be difficult for many reasons, but it is always a good idea to keep on top of your tax returns. There are a number of things that you can also do for tax relief, so make sure to take advantage of them if you can. This way, you can ensure that you make the most out of being self-employed.

If you are interested in more tax relief tips, the author recommends you visit OptimaTaxRelief.com


1 comment:

  1. Very helpful tips. Self-employed people should really be cautious with their financial reports especially that the income is not fixed.

    ReplyDelete

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