freelanceswitch.com: One of the things that makes would-be freelancers nervous to quit their day jobs is the whole issue of paying taxes. When we’re employees, our company handles most of our tax responsibility for us, deducting required amounts so we never miss the money.
As freelancers, this responsibility falls squarely on our shoulders. But tax-phobia shouldn’t keep you from pursuing the freelance life.
2 comments:
This article is fairly thorough in covering common tax issues faced by freelance designers and professionals. It makes a lot of good points, but even so, if you are thinking of going freelance, you'll need to do your research into what some of the things in this article mean. The author brings up the point of putting money away in an IRA or an HSA in order to avoid paying taxes on it. What the author doesn't mention is that you then can't touch that money for a certain number of years, and that you may have to pay fees upward of 50% to access the money. As long as you're financial situation allows you that freedom, it might be easier to pay the taxes on the money and have the rest available as cash flow.
The ultimate point to be taken from the article is that you need to do your research before committing to something as big as becoming a freelance professional, and you should always consider reviewing your finances with an account before making the decision.
John Green, an author, said once that the only tax form he didn't have to fill out was the one for fishing boat proceeds. Aside from being hilarious, he makes a good point about how people who work for themselves in any way tend to be absolutely buried with tax forms during tax season.
This article seems pretty straightforward. Registering your business, and everything that goes along with that, basically giving you something official to write on the forms, will definitely make the process easier, both on you and probably for the government.
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