As the New Year begins, it’s time to say ’tis the season! Tax season is upon us, and for many, that could be a welcome to the added stress of making sure everything is done correctly in case of an audit. For those who are self-employed, whether running your own business or finding freelance contract work, tax season can be an extra stressful time when thinking about tax preparation. There are so many things to keep track of when you work for yourself, and it is easy to get caught up in the mess of it all. If you are in the Pembroke Pines area, SmarTax is here to help.
If you have just started to work for yourself, chances are you have wondered what this means for your taxes and how much you will have to pay. Many different things could help to tackle this. Firstly, it is important to estimate how much money you will owe to the IRS. Starting early is critical, the worst thing would be to get hit with a massive tax bill at the end of the season. It is recommended to pay taxes every quarter. This will not only help your numbers be more accurate, but it will also help you avoid dipping into your tax fund, which leads to our next tip. It is imperative to set aside money for taxes regularly. Set up a separate account and automatically put in 20-25% that way you will have the funds available to pay taxes right away.
If You’re Self-Employed, Deductions Can Be Your Friends!
Taking advantage of deductions during tax preparation is crucial. These deductions could start right in your own home. Home office deductions can add up if they are done correctly. The easiest way to handle a home office deduction is first to make sure you have a separate room for your office. This makes it easier to make deductions based on the utilities it takes to work in that space. Basically, you can calculate the percentage of utilities for that one room and deduct them. There are a few other common deductions for those who work for themselves:
- Office Supplies
- From stationary to computer equipment, if it is purchased for your business to run properly, it can be deducted
- Job Search Deductions
- If you are a freelance contractor, the membership services you pay to job search websites can be deducted as a business expense
- Unpaid Invoices
- If a customer has not paid for your services, you may be able to write it off for tax purposes. It would have to be added to your earnings first and deducted as a bad debt.
- Tax Services
- Yes, even the fees for preparing these tax documents can be counted as a business expense; another reason why it is a good idea to trust it to the professionals.
Being self-employed can be stressful enough; keeping track of your own tax preparation can add more stress than necessary. If you are in the Pembroke Pines area, call or visit SmarTax today. Let us help you get through this tax season smoothly and happily.