Freelance Taxes
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- MrOneHundred0
Whatever you do, make sure you pay your taxes. I have just been hit with a $20,000 bill for 18 months of freelance where I didn’t put anything aside for tax.
- cosmo0
This is pretty cool. Thanks man.
- cosmo0
How much is required to put away from each check? 30%?
- PonyBoy0
do what I do... don't pay them and hope no one's lookin'.
- lol good luck with that!pango
- They’re always lookin’.MrOneHundred
- I wouldn't have said that! You are now getting auditted!capn_ron
- hahavisualplane_
- minimalista0
30% is a very safe percentage to set aside. If you do that you'll probably get money back (because you'll be setting aside 30% of your gross income, which has not had your expenses deducted).
- johndiggity0
http://www.irs.gov/pub/irs-pdf/f…
fill this out and send the check every quarter. if you fail to do so and decide to just file annually, you will be hit with interest charges. also don't forget about state taxes as well. you can find the forms on your state gov't site.
don't fuck with the irs. if you owe them money, they will find you.
- What do you think about pony's LLC deal? Worth it? Paying every quarter sounds reasonable I have to read up on it.cosmo
- 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
- mrbee28280
Get an accountant. It will be worth the $200 or so it will cost. If you're serious, then you have enough to deal with the first year without fucking up with uncle sam. Using some round numbers... if you make $100k in a year you're in a 25% tax bracket. If you're freelancing full time then you are self employed which means you have to pay self employment tax (medicare etc) so you can tap on another 15%. 25% + 15% = 40%!!!!!! Get an accountant and save ever receipt for everything you buy... down to bubble gum.
- MrOneHundred0
The problem for me was that when times were really good, I put some aside. But times become not so good, and what I put away, I had to use for luxuries like rent, food, etc.
But me and money have never had a good relationship...
- MrOneHundred0
In the end, though, the best way to handle my freelance taxes was to become employed and let some other schlubb deal with it.
- lolz... kinda right there with you. Same situations you described above - 'cept I had a...PonyBoy
- ... mooching relative tap me out.PonyBoy
- Yeah, me too – my wife
(just kidding).MrOneHundred - hahahaahah!!!!PonyBoy
- hahahahahahaha!!!cosmo
- 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.
- Jaline0
My dad does my taxes for me.
Someday I will have to fly out into the wild and be a normal person.
- 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.
- skelly_b0
Keeping your business account separate is a must. It makes accounting at the end of the year much easier. Don't be afraid to spend on business expenses. If you do you 're spending pre-tax dollars, whatever is left-over is what the Gov is going to rake. As MrBee points out we get to pay those extra taxes that employers normally pay. But having pre-tax dollars is a much bigger benefit, since the Gov gets at an employees money before anyone else.
And yes, I also would consider an accountant a must. It makes thing much easier. You just have to worry about a little bookkeeping throughout the year. Money well spent... and it is write-off.
- 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.
- visualplane_0
Here's a quick question. If you rent office space, can also still deduct half your rent if you use some of the apt as an office space (even if the home setup is taking up less that half the space)?
- you can write your rent off too? I didn't know that? Nice!!!cosmo
- Yeah, if you freelance from home.visualplane_
- fuck yeah I do.cosmo
- writing off half your rent is a bit risky, a smaller percentage will raise fewer flagsacescence
- I'm waiting for my accountant to get back to me.visualplane_