Full-time AND Freelance?
- Started 15 years ago
- Last post 15 years ago
- 16 Responses
- CincodeMayo
Who here is a full-time employee but also a freelancer on the side? How do you go about your taxes? I'm starting to take on more freelance stuff and need to get legit and figure what I'm going to do come tax time. Do I make myself an LLC? Do I just file a SE Form 1040? I'm hearing all sorts of ways to go about it. If it helps I'm in CA. What's the easiest way to handle this? Thanks peeps.
- epilI0
if you have enough in your bank to not pay quarterly, then do that, but estimate your taxes quarterly.. get an accountant who speacializes in creative people who freelance so you can write off with the best of them.
also in taking your taxes, you should tax yourself out weather you earn it or not, at 38%-40% meaning you will always be over taxing yourself, so come april 15th, you will always get money back, even without write offs..
the 40% tax bracket is for people who earn over 119K per year.. or better known as luxury tax.. otherwise tax out at 28.8%-32%.. and best of luck..
i freelance, fulltime.
- mydo0
cash.
- < thishilchev
- Did this for as long as I could. But more clients + legit companies = checks & tax forms. Cash still preferred.CincodeMayo
- of course, whenever possible. I offer about 20% discount for the cheap clients for cash.CyBrain
- CincodeMayo0
Thanks epill. This is all pretty new to me. I've been full-time for years with small projects here and there usually for trade or minimal payment, but I've started taking on larger projects/entering contests/etc., so I gotta figure this stuff out straight. So to answer your question, there ain't all that much in my bank account. Actually, if I go the SE 1040 way I was thinking of opening a new account specifically for freelance earnings/taxes. Good idea? Bad idea?
So from what you said above, go the SE 1040 route and just put aside 40% of all my earnings, right? Then come tax time (or sooner) get an accountant who can help with write offs? Ideally I'd much rather get money back come tax time, and I don't plan on writing off all that much...just trying to make this as simple as possible.
Anyway, hopefully I'm getting this right. Tax talk to me is like Chinese, and I suck at Chinese.
- yes, open a new account not connected to anything, and put that money in there..epilI
- dont ever touch it.. it is not yours. pay your taxes with it.. but get an accountantepilI
- for write offs..epilI
- you will have to estimate your earning quarterly and pay every 3 months.. or wait til april..epilI
- and cry when you dont have the funds to pay your taxes because you will be freelance..epilI
- being a freelancer, doesnt always mean you get paid, if on time..epilI
- that is why you claim/ estimate your taxes quarterly..epilI
- Got it. What a royal pain. So I should put 40% of earning or ALL my earning into the new "freelance" account?CincodeMayo
- The new account should be only for your taxes. Your earnings keep in your savings/checking.epilI
- This way when you need to cut a check you have the funds that you managed separately for taxesepilI
- akrokdesign0
yes.
i think e-pill got it covered.
- i had have accountants, but this year i just did it with turbo tax.akrokdesign
- Easy enough? Or would you recommend an accountant?CincodeMayo
- i recommend the accountant, as they will know all the loop holes for writing off in your areafrozendeadgumby
- hektor9110
e-pill do you want to be my accountant?
- d_rek0
A personal friend of mine is a CPA who does taxes on the side. I simply hand over all of my forms/documents and tax info and he takes care of the rest. He told me that for any freelance I do I should put away no less than 30% of my earnings and that it should be more than I need. I'm in Michigan.
- umbee540
accountant who knows is always the best. focus on what you do best and let the accountant take care of your paperwork. less stress and you have more time to dedicate to your work.
- dieselboy0
Im making about 30 to 40k on freenlance per year. I started my own INC. My rule is 30% of freelance goes to taxes. In addition I write off all food, cell, software, hardware, gas, hosting, internet, tolls and anything else that can fall into my category.
- CincodeMayo0
Good advice...thanks for the help. Now I need an accountant. Anyone know of any good ones in the LA area?
- TheAnthonyWallace0
taxes?
- ethanfink0
Getting a separate bank account for the freelance is a great idea. Also a great idea is getting an EIN#. I ended up doing this through an LLC for my company, but you can also do this for an individual freelancer.
http://www.ehow.com/how_4771391_…If you want to do it right, you should use deductions as much as possible. Otherwise you will be throwing away money, having a separate bank account is key to keeping your affairs in distinct areas. Use different credit cards, one for freelance business and one for personal.
For investments look into SEP or Traditional IRA's that will help lower your taxation for the year.
If only this stuff came easy... It has taken me years to know the best routes for this stuff. Don't expect to learn it all in one forum. Get an account as everyone says, and don't be afraid to pay him well. Don't fall for this HR Block stuff...
Best of luck.
- Awesome advice. Thanks!CincodeMayo
- SEP is the ultimate best thing ever also a ROTH IRA. ask your new accountant of those.epilI
- Josev0
hah, ethanfink, I popped into this thread to suggest a separate bank account but you already posted it. The other good thing about having a separate bank account is that, if you set it up in quicken or quickbooks, it would be very easy to manage all of your 1099 income and deductions. You could put everything on the freelance debit card, assign it to a category and export a report at the end of the year for your accountant (or run a report at any time to gauge how much you owe at that point).
- hiatus0
Can someone recommend a 'creative person' account... epill?
Thanks.
- wagshaft0
Freshbooks is a good option to help with book keeping.
I've been freelancing on the side with a fulltime job. I'm starting to phase out the side work as the amount of hours per day can be a bit taxing and the quality of work is hard to keep at a high level.
- shellie0
Getting an accountant and business manager was the smartest thing I've ever done. My accountant keeps my AR/AC straight and my biz manager advises me on staffing, work flow, processes, projects, and helping me staff accordingly. I think everyone should run like a mini agency. It keeps your eye on what you do best -- make things. If you can own what your selling (yourself) and you have someone (or two) who can worry about everything else, life is good.
- and im on a bi-weekly draw. my accountant pulls my taxes out of every job for me. its pretty brainless. I'm set up as an LLC.shellie
- herzo0
Great thread, even better advice