You can also download your data (if you wait up to 45 days), but you can’t upload that data back onto the website again. Wave similarly lets you export transactions as XLS and CSV files and sales receipts in a ZIP file. If you’re already logging into your banks, credit card companies, and so on online, you only have to enter those same usernames and passwords within your accounting application. As transactions appear in your online accounts, you can import them to your accounting service and track your income, expenses, and balances in close to real time, all from one convenient dashboard.
The amount you spend on a professional to complete your tax returns could easily be several hundred dollars if you have several clients and a wide range of expenses. Some freelancers find it too challenging to gather all the records necessary to file their tax return by April 15. If that’s true for you, Allec said to remember that you can also file for an extension of time to file your tax return until October 15. He added that most tax software programs offer filing extensions as a free option. For most people, the ultimate goal when you file your taxes is to reduce your liability to the lowest allowable amount.
Tips for Success in a Work From Home Accountant Job
I’ll have to say, using free or affordable e-filing services like Turbotax has been amazing, user-friendly, and confidence-building. So there I was, wondering what on earth I needed to https://www.bookstime.com/ get this job done. I soon came to find that filing taxes as a freelancer was as simple as 1, 2, 3…4. TurboTax Premium searches 500 tax deductions to get you every dollar you deserve.
- Tax season has rolled around again, adding to the work and worry loads of America’s small-business owners, more than half of whom are aged 50 or above, according to data from the U.S.
- If you’re willing to forgo some of the more advanced features out there if it means paying half of what TurboTax is charging, go with TaxSlayer.
- Travel and meals are some of the trickier tax deductions as a freelancer.
- (How retro.) Nowadays, you can just download a program from a trusted tax prep company’s website.
You’ll sometimes also have to be willing to meet with clients in person. You could also consider looking at all of the “Big Four” accounting firms (Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers.), as they also regularly hire remote accountants. In recent years, this industry has been shifting, as more and more companies recognize that there’s no need for an accountant to be available on-site, full-time. Don’t fall into the trap of thinking that your business is too minuscule for taxes — that’s almost never true. Though there is a threshold that dictates whether or not you need to file, it’s far lower than most people assume; in fact, it’s a measly $400.
Protect Your Personal Assets
Taxes for freelancers can be overwhelming sometimes, especially for those whose forte is not finance. If you file your taxes yourself using an online software application, consider purchasing audit protection or similar services for additional peace of mind. To play it safe, you may want to hire a CPA or professional tax preparer, especially if your cash flow is complicated or you feel insecure about your reporting. Though software helps bypass complicated paper forms and navigates you through changes to the 1040 form, counsel from an experienced professional can boost your confidence and cover all your bases.
- Therefore, the easiest way to reduce your taxable income is to use the simplified home office deduction option and claim $5 per square foot used exclusively for business.
- We are independently owned and the opinions expressed here are our own, and not those of any partner [bank, credit card issuer, hotel, airline], or other partner.
- The service is essentially tax software, as it guides you through the process and may even help you with some state filings.
- It’s exhilarating to set your hours, be your own boss, select your clients and decide which projects you want to pursue or pass on.
For example, if you start a return with Turbo Tax but realize it’s going to be too costly, you can switch gears and upload your current work onto TaxAct’s services. Aside from retirement plans, Reams also suggested electing to take the entire deduction for any equipment purchased in one year rather than spreading it out over a few years if you need to reduce your tax bill. “A retirement plan is the best tax shelter there is,” said Morris — as long as you don’t need access to that money until you reach retirement. Another option, becoming a limited liability company (LLC), offers businesses flexibility of a partnership while shielding shareholders’ personal assets from being seized to settle the LLC’s debts or legal obligations. At most, LLC shareholder can lose only the amount they invest in the company. As a self-employed person or business owner you may feel as if you’re paying more in taxes than if you were a traditional W-2 employee.
Determine If You Have to Pay Freelancer Income Tax
Zimmelman also says that a Savings Incentive Match Plan for Employees, SIMPLE IRA, is a type of retirement plan for small companies with fewer than 100 employees who don’t have another retirement plan. “There is also a self-employed 401(k) option for self-employed individuals or businesses with no employees (other than yourself and your spouse),” he says. Another common mistake that gig workers make is failing to take advantage of all the deductions available to them, according to Fishbein. Some commonly overlooked deductions include home office space, start-up costs, business mileage, and marketing expenses. Rigney added advertising, vehicle licenses, and car expenses such as gas and repairs, noting that it’s critical to keep receipts for all of the items purchased to make claims.
- Business expenses may apply to freelancers specifically, but independent contractors can take advantage of other common tax deductions and credits.
- IHireAccounting is another niche job board dedicated solely to the accounting industry, bringing job seekers and employers together to make sure the right people are doing the right jobs.
- Potentially, this tax classification could save you thousands of dollars, said Hooman Radfar, CEO of Collective, a finance platform for full-time freelancers.
- Being an online accountant, or in any position that allows you to work from home, really, means that you’re in charge of when you work, where you work, and how long you work at a time.
- If that’s not an option, read the contract through very carefully and consult a lawyer if you need to.
“If your business’s cash flow can sustain it, this is one of the best ways for solopreneurs to reduce their tax bill and fund their future,” he said. Another way to avoid the penalty is to file for first-time abatement penalty relief, which allows people who have been compliant in the prior three years to have their penalty forgiven, Reams explained. accountant for freelancers To minimize penalties, you should pay at least 90% of what you expect to owe, says Lee Reams Sr., co-founder of the tax-advice website TaxBuzz. Second, take a breath and consider the following strategies and advice. Some may offer relief on your 2023 tax bill while others could help you in the future as you continue to grow your business.