Are you still paying your taxes as a freelancer?

TommyCarey

I definitely pay my taxes, if I don't, the government will come to my house and arrest me lol. Paying your taxes is a common thing if you live in the US, I'm not sure how it works anywhere else in the world, but that's how we do it here. If you have a regular 9-5 job where the company gives you a paycheck every 2 weeks, your taxes will be taken out of your check before it ever gets to you. This is great because they usually take out too much and you get a tax refund check, which is a good amount of money if you make a decent amount each year. The more money you make, the more money that is taken out of your checks and this means the more money they will refund you at tax time.

As for freelancers, we need to do all of our own taxes since we are basically business owners. It doesn't matter if you're incorporated or not, if you're working for yourself, you own a business and you need to run it professionally. Not paying your taxes means you're not following the laws set forth by your government, even if you don't like them, you need to pay them.

I actually have to pay personal and business taxes, even though I own my business and pay myself directly. As soon as the money leaves my business account and goes into my personal account, it's money earned and I have to pay taxes on it. For this reason, I try to use my business debit card for whatever I can and I only pay myself enough for bills each month. All of my lunches are written off because they are under $75 and I don't need a receipt to show proof that it was a business-related lunch lol.

If you make over $600 within a year, you need to claim it on your taxes. If you don't, you're at risk of getting audited, which is never a fun experience. I personally have never been audited and I hope I never do. I've heard of companies getting audited and they all say the same thing "It's a horrible time because all of your sales are under a microscope by the government and you likely have to pay fines for not claiming the right amount or not paying the proper amount in taxes".

To figure out what you need to do when it comes to taxes, you will need to go to your government's website and research the laws that are involved with taxes specifically for you. You can always contact an accountant and have them do all of your taxes, and I highly recommend this if you have a lot of sales coming in because it would just be easier on you. If you do hire an accountant, you won't have to stress out about what you need to claim and what you need to pay taxes on, they will figure out all of that and get your payments as low as possible. Remember, the less they can get you to pay, the more likely you will come back to them again and again

If you're worried about how much you will have to pay in taxes, just think of it this way. You will need to save around 50% of your money to pay for taxes, to pay for advertising in order to boost your sales and money to pay yourself. The other 50% should be saved for later in case you have something go wrong and you need a cash bubble to fall back on or if you want to invest in a new system or website that can make you more money down the road

I definitely pay my taxes, if I don't, the government will come to my house and arrest me lol. Paying your taxes is a common thing if you live in the US, I'm not sure how it works anywhere else in the world, but that's how we do it here. If you have a regular 9-5 job where the company gives you a paycheck every 2 weeks, your taxes will be taken out of your check before it ever gets to you. This is great because they usually take out too much and you get a tax refund check, which is a good amount of money if you make a decent amount each year. The more money you make, the more money that is taken out of your checks and this means the more money they will refund you at tax time. As for freelancers, we need to do all of our own taxes since we are basically business owners. It doesn't matter if you're incorporated or not, if you're working for yourself, you own a business and you need to run it professionally. Not paying your taxes means you're not following the laws set forth by your government, even if you don't like them, you need to pay them. I actually have to pay personal and business taxes, even though I own my business and pay myself directly. As soon as the money leaves my business account and goes into my personal account, it's money earned and I have to pay taxes on it. For this reason, I try to use my business debit card for whatever I can and I only pay myself enough for bills each month. All of my lunches are written off because they are under $75 and I don't need a receipt to show proof that it was a business-related lunch lol. If you make over $600 within a year, you need to claim it on your taxes. If you don't, you're at risk of getting audited, which is never a fun experience. I personally have never been audited and I hope I never do. I've heard of companies getting audited and they all say the same thing "It's a horrible time because all of your sales are under a microscope by the government and you likely have to pay fines for not claiming the right amount or not paying the proper amount in taxes". To figure out what you need to do when it comes to taxes, you will need to go to your government's website and research the laws that are involved with taxes specifically for you. You can always contact an accountant and have them do all of your taxes, and I highly recommend this if you have a lot of sales coming in because it would just be easier on you. If you do hire an accountant, you won't have to stress out about what you need to claim and what you need to pay taxes on, they will figure out all of that and get your payments as low as possible. Remember, the less they can get you to pay, the more likely you will come back to them again and again :D If you're worried about how much you will have to pay in taxes, just think of it this way. You will need to save around 50% of your money to pay for taxes, to pay for advertising in order to boost your sales and money to pay yourself. The other 50% should be saved for later in case you have something go wrong and you need a cash bubble to fall back on or if you want to invest in a new system or website that can make you more money down the road :D

7 years ago