Do you want to know how to save money as a freelancer? Being a freelancer in this climate can be a great position. Unlike other people dependent on one company that could collapse at any moment thanks to the pandemic, you have diversified your income sources.
As a freelancer you also don’t have to be attached to one industry, you can do one of a number of jobs in different sectors.
But filing taxes can be a pain. How can you reduce the amount you spend filing taxes as a freelancer? Here’s everything you need to know.
Hire an Accountant
The great thing about an accountant is that they will have a tax strategy. They can look at your individual circumstances and give you some options as to the best-case scenario in terms of your tax bill.
You might feel that paying for an accountant is a waste of money or that you will save more money from filing your own taxes but that isn’t correct.
An accountant’s knowledge of tax law and deductions could end up saving you substantially in net taxes (and headaches).
Filing your taxes early is important. If you leave it until the last moment you will be running around, stressed out and unable to concentrate on anything else. Remember the deadline for paper taxes is usually earlier than online.
Know when your deadline is and make sure your taxes are prepared well in advance. Ask your accountant how long he or she needs to prepare your tax bill for you and get on it as soon as you can.
Remember that if you live abroad you will still need to file two tax returns and pay two sets of tax as all worldwide income is taxable for American citizens. This is one of the downsides to taxes for self-employed people.
Know the Law
You can’t just hand over your income to your accountant and hope he or she takes care of everything for you. You need to have some basic understanding of the law. One example is the new rules introduced during the pandemic for charity donations.
This is because your accountant could be doing things that are illegal or which you might not agree with.
You are never going to be able to match their level of detail of accounting and you don’t need to know every small detail but you should have a good overview of what is going on with your tax affairs.
If your accountant has registered you offshore in, for example, the Cayman Islands, then you should probably know about this as it might have implications in other areas of your life.
Filing Taxes as a Freelancer: Hire a Great Accountant
An accountant is the best way to save money filing taxes as a freelancer. They are going to be able to ensure you have the best deal when it comes to your tax return.
But make sure you are aware of the law yourself in case anyone from the Inland Revenue Services comes calling. Be sure to file early as well to avoid stress.
If you are interested in learning more about filing taxes as a freelancer be sure to check out the rest of our site.