Freelance Taxes
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- OSFA0
pffft, why pay? ;)
- dibec0
two things are certain in life ... death and taxes. ;)
- edd-e0
cosmo, take out 40% for taxes, this percentage will give you a good enough bubble where you are over estimating enough where you wont under estimate. the 40% also will guarantee you receive money back instead of you paying more come april 15th. also keep every receipt you can, this means everything. any time you also use your ATM card, if the exchange was under $500 it can be written off. half your rent, and half your bills thru the home can also be included as a write off, if you work out of your home. if you are in a commercial space, and you rent from there its 100% write offs. also a good way to write off is to make charaties more important part of freelancing. a good dontation thru Goodwill or some other charitable organization is awesome!!! and the write off is good for it too. keep all your receipts, bank statements, utilitity bills, for the next 7 years, freelancers get audited a great deal more than businesses and fulltimers. so always be prepared to have all the info you need, just in case. get an accountant too, get someone who knows the loop holes in getting you to keep your money over flushing it out to the govt. each state has a different amount of loop holes so the accountant should know the deal...
good luck!!!
also charge the world for your work!!! demand nothing less as well.
always have a contract, and get everything in writing, and if you charge per job, get a sum up front. dont let your money stay in their pockets!!! its yours so take it!!!:)
- visualplane_0
The IRS is watching you like...
<img src="http://www.ceilingcat.com/img/ceilingcat.jpg">
- visualplane_0
<img src="http://www.ceilingcat.com/img/ceilingcat.jpg">
- visualplane_0
img src="http://www.ceilingcat.com/i...
- visualplane_0
ok, how the hell do you post a image on here?
- edd-e0
- what's the code eddie?visualplane_
- you're thinking about it too much...horton
- *insert baby dangling from stroller image herePoint5
- ah, I think I got itvisualplane_
- honeydesign0
Yea. Pay quarterly to avoid paying penalties! And I agree with flashbender -- get a good tax guy. He'll tell you what to do.
- visualplane_0
When you outsource freelance work to another designer, how does that work? Let's say your charge $X an hour at 60-80 hours a week, and 20-40 of the hours are outsourced?
- skelly_b0
You need to get a W9 from from them. Then just keep their invoices so you can write off what you paid them.
- visualplane_0
Cool, thanks
- leadtrum0
I'd just setup an LLC or S-Corp and save some money on taxes. Its a little more paperwork but its worth it.
- skelly_b0
I've had an S-Corp but ended up dissolving it because the Annual Report and associated fees became tiresome. I now have my company setup as an LLC. For a freelancer the tax benefits are the same. The LLC just has less paperwork involved in maintaining it. If you are going to start a larger business with employees and partners there can be some big advantages to a C-Corp. These have more paperwork involved then all of them, but for larger businesses they have the most tax advantages.
- I will add some of this varies from state to state. It is always good to consult a good accountant on all this.skelly_b
- seed0
As mentioned you can write off everything business related: mileage (48.5 cents per mile), office furniture, hardware and software, meals, travel, square footage of your house, classes, etc.
I was just buying software for instance and it is like buying it at a 40% discount considering I would've been taxed on that money anyway.
- seed0
Does anyone here have an SEP IRA? I need to look into that along with an LLC and quarterly tax payments. I freelance part time and have done way better than expected this year so I'm afraid I will owe a lot for the first time this year.
- cosmo0
How and where does one get an LLC?
- you create it with the state you are living in. some states have simple process online, others require an attorney as process is difficult.madirish
- I was told it cost $200 in NYCvisualplane_
- visualplane_0
Actually we plan on starting a LLC, and I'm letting my partner handle that part as he's coming from the business side of things.
- madirish0
as a side note cosmo, i have read a lot of your posts and i think a really smart thing for you to do would be to read some books on basic incorporation and tax structure, both federal and state. not being a dick here at all, but many of these questions you are asking are *basic* business establishment principals. : )
- Yeah I really need to read up on this. I am no business person, but I need to save my ass from the IRA. Full time freelance is new to me. :)cosmo
- ...freelance is new to me. :)cosmo
- LOL
i think you mean IRS....
get a book... quick. ;)madirish - hahahahaahahh IRA! Man I need to stop typing fast and read,cosmo
- seed0
Look at your states site. Maybe search 'state name LLC'. The cost can vary greatly. I think it is like $125 in MO and $500 in Illinois for instance. I'm getting more in to custom e-commerce so I am thinking about it mostly for the liability protection.