All Articles Tagged "freelancer"
As a freelancer or independent contractor, understanding how to navigate your taxes is a crucial aspect of running a business. Failure to comply with the special self-employment guidelines could result in penalities, audits, and further action against you (and your business) by the IRS.
We chatted with Dr. Roshawnna Novellus, business strategist, author, and founder of Novellus Financial, a firm that provides high level financial guidance and business strategy planning to businesses, and New Adams, a NY-based tax accountant whose resume includes stints at top firms Deloitte and UBS. These seasoned tax experts helped us understand how freelancers, in particular, can optimize their deductions and get out of tax season with their heads above water.
Here are five tax tips our experts recommended that freelancers keep in mind as we approach the April 18th, 2016 filing deadline.
1. You cannot avoid self-employment tax.
According to Novellus, “If you are self- employed, all income is subject to both income tax and self employment tax. As such, remember to add an additional 15.3 percent to all profit when estimating your tax liability.”
Think you can escape it? Think again. Adams notes, “If your freelance business generates over $400 annually, you have to pay self- employment tax.” Therefore, she urges contract employees to keep clients on track with providing you with a 1099 form. Remember, if you make $600 or more from any one client you must report the income on your personal tax return.
2. Understand what kind of return you need to file.
As a freelancer, it’s important to know your business structure in order to best understand your tax filing requirements. Many times, freelancers don’t always understand that corporate tax returns and self-employment tax returns have different filing dates and tax forms. According to Novellus, “Companies that formed as a C Corporation, S Corporation, Partnership and/or Multi-Member LLC must file their tax returns by March 15 every year.” Also, each entity has a different tax form.
3. Know what tax deductions you can take.
As a freelancer, deductions can be your best friend and help offset your amount of total taxable income. As a freelancer, you are able to take more deductions than those who are aren’t. Deductible expenses include (with strict guidlelines): home office costs, domain and web hosting, telephone/internet costs, auto expenses, advertising, professional fees, retirement contributions, and more. Novellus states, “Freelancers, can deduct 50% of meal and entertainment expenses for work-related activities [and] can take the full deduction for insurance and education which is not allowed for those who are employees.” Additionally, Adams recommends that freelancers, especially, take advantage of startup cost deductions — something first-time freelancers often miss.
4. Commit to solid record keeping.
As a freelancer, you should be keeping track of all business income and expenses and keep all documentations for up to three years, as recommended by the federal government. If you aren’t good with paper documentation, try using different mobile apps that allow you to keep track of receipts and expenses. By becoming diligent about your expenses, you’ll be able to “understand how you spend your money and it also helps you with planning for the future, ” according to Novellus.
5. Be honest about your income.
With self-employment tax being so high, it can be tempting to lie about how much you really make. Many freelancers, Novellus says, may not know that “the IRS compares your income and expenses to industry standards. If you have way more deductions than are reasonable, you are much more likely to be audited.”
Rana Campbell is a marketing/branding professional who helps creatives & lifestyle entrepreneurs build brands that SHINE in the business world. She is also the host of the Dreams in Drive: No Parking Podcast. Connect with her on Twitter, Instagram, Linkedin, or ranacampbell.com.
Those who freelance can tell you first-hand how rewarding and stressful the journey is. On one hand, you have more flexibility and the power to call your own shots. On the other, it’s not always easy to earn a steady paycheck. Here are some tips on building a reliable stream of income as a freelancer.
For some reason it surely does seem like people think working for yourself is a walk in the park. Images of kicking back with your feet up in bunny slippers or “doing lunch” with gal pals on the daily are fantasy. Believe it or not, entrepreneurs actually have to work. Sure there are some perks to not having to answer to anyone but as with everything in life, there are a few downfalls. Here are the pros and cons to working for yourself.
Welcome to our new column “Mommy Mogul”! This weekly article will cover issues of importance to moms who are launching a new business, working a side gig, or are managing work life and home life. Is there a topic you’d like us to address? Send your thoughts to firstname.lastname@example.org. And, as always, take to the comments with your feedback.
As I sit here and type with a Boppy around my waist and new baby in my arms, I can’t help but breathe a sigh of relief for planning ahead. Sure it may sound like I am working now but in reality, I can assure you I’m not. Whether you work on a contractual basis or run your own show, you know that taking time off requires a ton of work. These sorts of workers don’t usually have paid vacation time at their disposal. If something doesn’t get done, you don’t get paid – and when motherhood is on the horizon, that’s just not an option.
When it comes to your business, preparing for delivery does not have to be a super difficult task so long as you plan ahead. Call it the Virgo in me, but I have never been one to just leave things until the last minute. That’s was too much unnecessary stress I really don’t need.
As I knew my due date was in mid-January I used much of my downtime around the holidays to get things ready for my absence. One of the first things I strongly recommend doing is deciding just how much time you want to take off. Is the standard 12-week maternity leave feasible for what you do (most likely it’s not)?
As for myself, about two weeks was good enough time for me; it wasn’t so short that I would be hopping back into the game right off the delivery table, and not so long that I would become antsy (let me point out that I work from home full-time). It’s also important to note that the amount of work I needed to complete for my absence was manageable. I wouldn’t need to kill myself with late nights trying to accomplish both my daily demands and future obligations. You’ll also want to take it easy because you are going to need that energy for the big day!
I gave myself a few weeks to get the additional work done at my own pace, which is the best decision I ever made. Doubling up can be extremely frustrating at times, especially when you are a box of hormones waiting to explode. Yet the feeling of completing what you set out to do is so glorious. In the words of that rotisserie guy, set it and forget it!
Now that I am on the other side of labor and delivery, I can’t tell you how good it feels to rest with my new bundle of joy knowing business is taking care of itself in the background. And trust me when I say after giving birth, the last thing you’ll want to do is think about work, let alone do it. There are times when I check in to see how things are going, but for the most part I am indulging in a life on cruise control — at least for the time being.
Are you expecting a child and need to make preparations in your business for your temporary absence? If so, what are some things you can do ahead? And don’t forget to give the proper heads up to clients and employers about your pending absence as they too may need to make their own provisions while you are gone.
Whether by choice or by force, many in the job market these days find themselves taking on contract or freelance work. Marketing yourself as a freelancer can provide a solid flow of income and additional flexibility in schedule if you get the right gigs. For those fighting the job market as a freelancer, Inc.com gives some tips for how you can make yourself stand out from the crowd.
First things first, make sure your portfolio is diverse and unique. As a freelancer you must stay flexible. A varying range of assignments and services shows that you have a well-rounded perspective and can easily adapt to what the employer is looking for, applying skills from previous jobs to meet the demands. If all of your projects are similar, then an employer may not have high expectations for your ability to perform a new job.
Next, manage your career like a business. Run your professional life as your own personal “freelance mini-empire.” There are thousands of freelancers that are hired from various websites and temp companies. As the queen of your freelancing empire, you show that you’re able to make it on your own. Most likely you have other regular clients. This new employer will recognize that if you’re good enough to have other regular clients, then they too can believe that you’re good enough to hire again, saving them time and energy in their search the next time an opening pops up.
The next tip is to be a hard negotiator. Research the position and stay in-line with your previous salary expectations, only seeking to earn the same wage or higher. Don’t take the first offer the new employer throws out or sign for less than what you know you’re worth. If you don’t value your skills, the employer won’t either.
Lastly, Inc.com recommends that you skip the sales pitch. If your resume is written correctly it will speak for you and the employer will know how talented you are. Instead, sell on how your personality fits what needs to be done.
Some people think being a freelancer who works from home is a leisurely life. Nothing could be further from the truth. Being your own boss can be a shock to your everyday routine and a shock to your bank account if you aren’t prepared.
Do you really have what it takes to be your own boss and work from home?