Top 10 Tax Tips For the Self-Employed

Tuesday, March 12, 2013

Top 10 Tax Tips For the Self-Employed

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 decide what you are most likely to gain.

Keep a Record

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

Calculate Estimated Tax

Determine what percentage of your taxes 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 noble thing. On top of this, you can also deduct what you pay to 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 offer 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 independent can be difficult for many reasons, but it is always a good idea to stay on top of your tax returns. There are a number of things that you can also arrange for tax relief, therefore,  make sure to take advantage if you can. This way, you can ensure that you get the most out of being self-employed.

Author Bio:

Lynne is a professional writer, expert in writing finance and tax related articles. She gives several tips to her readers on how to manage their income and receive tax relief.

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