Taxes and the Self-Employed
Taxes can be a confusing subject if you’re self-employed. Actually (if you’re in the U.S. at least) taxes can be massively complicated and confusing period, no matter what your employment status. The tax code is huge, and it’s probably safe to say that no one person actually knows everything in it.
If you work for yourself and are unsure of what to do when it comes to your taxes, you can do the same thing you’d do if you were employed and unsure: get help.
The IRS itself has always been helpful when I’ve called with questions, pointing me to resources available online and transferring me to people with more direct knowledge of what I’m asking about if the people I talked to didn’t know the answers themselves.
You can also get professional advice ahead of time before becoming self-employed, and at regular intervals as time goes by. For example, you could consult with a CPA or a tax preparer with the specifics of your situation. A CPA can also help you decide how to structure your business so that you have the best options tax-wise.
When you’re self-employed, there are some additional things to consider when it comes to taxes.
You’ll likely have to file estimated taxes quarterly, or have them filed for you too if you don’t feel comfortable doing it yourself. You’ll also have to pay self-employment tax, so don’t forget about that! There may be additional tax deductions you can take as well.
The important things are to set aside enough money as you earn the money for your taxes, and then to file and send them in on time.