The freedom to select clients and working hours are some of the perks of becoming a freelancer. Before you become a freelancer, it is wise you learn more about the taxes you will be paying. You need to know that taxation works differently between the freelancers and the employed people. To know taxation for the freelancers works it is smart you search for the best website to guide you. The goal is to ensure that you adhere to the taxation laws set by the IRS for self-employed people. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
For the employees, the employers are responsible for handling their income taxes. The money you get when you are employed is less different from voluntary and mandatory deductions. The employer will withhold your income tax for the month and make other voluntary deductions. The taxes you pay when you are employed will be determined by how much money you earn and the State you work. It is also wise you learn more about things that can help you pay fewer taxes. It is smart you view this website that will guide you to know the taxation forms to use when you are employed. The other thing is to check the state and local taxes that you are required to pay depending on where you live.
When you are a freelancer, you need to understand that you are responsible for handling all matters relating to taxation. Your clients will not deduct the taxes from the money they pay you for the services you offer to them. It is therefore up to you to keep a good record of all the incomes for a given period to decide the total amount to pay in taxes. When you are a new freelancer, it may be hectic to decide how to best calculate the taxes to pay. It is wise you look for resources that will guide you on how to handle this task. Some freelancers opts to hire accountants to help them when calculating the taxes and ensure they pay them on time. Other prefer to invest in an accounting and taxation software, where they input their incomes and the software calculate the taxation. You should therefore compare these two options to determine the one to use. You also need to get more information on tax write-offs you can get when you are a freelancer.
It is thus crucial you keep a record of the income you earn as a freelancer for a given period. Consider using spreadsheets to input your income after every work, record the money you earn and the expenses you incur.