freelance taxes
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- seed
If I recall correctly, the rate that I am paying for freelance income is around 40%. It seems like that high of a tax rate would completely stifle and discourage new businesses from getting off the ground.
Other than the normal write-offs, what options have you found that help improve this percentage - like incorporating, etc.
- jetSkii0
Not reporting them might help put a good percentage
- nocomply0
Report less??
But in seriousness, do you have a workspace to write off? That's my biggest expense. Mileage also adds up throughout the course of a year.
Probably not the advice you were looking for, but I don't know much about taxes and don't do my own, so I can't help much beyond that.
- bored2death0
You won't get rich freelancing.
- seed0
Due to the margins I think sales is more difficult. Take an ecommerce site for instance. 100k in sales, actual profit - 15% or 15k, profit after taxes = only 9k. You would have to have a profit of 80k to keep 48k after taxes.
- SoulFly0
beat thing u can do is to get a good accountant
- seed0
I know all the standard write offs - mileage, business use of home, etc. A lot of people will want to write off enough to where their profit seems low. My tax advisor says then if you're not making any money what's the point.
- seed0
I'd like to opt out of social security.
- woodyBatts0
Few things, if you are not incorporated then you woll not be able to take advantage of all the write offs that you can get.
Equipment, Mileage, Office space are but a few...
Electricity, Gifts, Travel, Rental Fees, list really goes on and on.
I have been keeping a blog on freelancing maybe it could help... http://www.thisfreelancelife.com…
- Charity donations?Ranger
- You can still write that stuff off. You don't need to be incorporatedfyoucher1
- S corp is the same tax rights as sole proprietors, all the profits pass to the individual. C corp is different but you pay taxes twice.Q
- Or DBA, same benefits, but if you get sued they can come after your personal assets, unlike a C-Corp or something like that.ArmandoEstrada
- fyoucher10
Get ready for a 4 - 5% increase in 2011 :)
- Q0
I've been fighting this for years. The best thing to do is get a good (not necessarily honest) accountant that is familiar with your kind of business. You need to hide as much money as possible to make it work. It's ridiculous. The Tax on small business and freelancers is way to high, yet that's were 85% of all the jobs are.
- TheRapture0
income is income, it has nothing to do with freelancing
- Except self-employment tax and a bunch of other things of coursefyoucher1
- seed0
Rapture, I think when you are paying tax for self employment income in the US you are paying the full amount of Social Security and Medicare rather than your employer sharing the cost with you.
- woodyBatts0
"income is income" in regards to the above.
One of the discussions I have a lot of the time is between FT vs. PT freelancers. In almost every situation PT freelancers get really screwed over. The reason below.
FT Freelancer =
Income-Expenses then taxesPT Freelancer (which is really just inc. vs not inc.)
Income-taxes then expensesIt is true that whether you are incorporated or not you can write the same stuff off, however the amount that you can write, the percentage of tax vs income, and various other elements change.
- jonnypompita0
Can anyone recommend a good accountant in NY?
- woodyBatts0
Feel free to email me
- Q0
Martin J Finkle CPA
A friend of mine switched to him and saved 10s of thousands on his taxes.
- vitamins0
I just remember filing estimates quarterly. It's been a while since I was a FT freelancer.
- nthkl0
Write offs are key. All electronics, hardware, office space (Square footage of your home), auto usage for meetings, entertainment, research, food/meetings... It's best to get a tax id for your business, LLC's in nevada are super cheap to llc's in ca.
You want to bring your overall taxable income down as low as possible.
First year I freelanced I owed about 20k. Lately, they owe me. Took 10 years to learn about write offs.
- Miguex0
just got a tax person for the 1st time this year, it was only just a few bucks over the software I was going to buy, and don't know how to use. In only 1 meeting with her, I learned so much.
It's a huge relief and it will help you save A LOT of money, so much that their fee doesn't look like an expense to you.
DO IT
- I'm may be emailing you for you tax person's contact info.nocomply
- MondoMorphic0
What has really helped me is writing off all the hours I've spent on my own, personal projects. Designing my site, creating iconography, etc. You can deduct the amount of time you spend investing in these things x your hourly rate...and the cost of your website(s) can even be depreciated.
- Great tip!nthkl
- I did not know this! thank you for this tip!theredmasque