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Written by Mat Casner

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5 Simple Tax Tips for Freelancers

Finance and Legal | 1 comment

Disclaimer: I’m not a tax advisor, accountant, or financial professional. I recommend getting qualified advice from a certified finance or accounting professional. These tax tips for freelancers are based on my own experience as an American freelancer based in the US. These tips are not necessarily applicable to American expat freelancers living and working abroad.

With this in mind, I would like to share with you a few tax tips for freelancers, and how I approach the subject of taxes in my own freelance business. My attitude about taxes is that it’s not the most pleasant thing, but I know I’m going to owe, so I’d rather just pay it and move on with life, rather than give the IRS reason to pay me more attention than I need. 

Whether you are a partnership, sole proprietor, LLC or corporation like I am, you are a small business owner and with that, come some advantages in the form of write-offs. These business-related expense deductions can greatly help reduce your tax burden and keep more money in your pocket. 

I give several tax tips for freelancers in the video below, or scroll to read about how to be prepared when it comes to tax time.

1. Take Deductions

Start with a list of everything you pay and determine which are being used throughout the year for your business. A big one could be your home office. You can partially deduct portions of your mortgage, interest, utilities, even the internet that you’re using if you have a dedicated area of your home set up as an office.

Business Related Purchases – Did you buy a new chair for your home office? What about software? Other ideas include expenses relating to travel to and from your client meetings, like gas, airfare, etc. Subscriptions to business publications, dues for memberships, etc.

2. Be Diligent

Using your business accounting software (I use QuickBooks), categorize your business expenses. Keeping track of your business expenses steadily throughout the year will alleviate any headaches derived from searching for deductions after the fact. 

3. Get Insurance

As a more general tip, I would like to emphasize the importance of work insurance. This is aside from health insurance and home insurance. Rather, it protects against damage and theft to your equipment. If you happen to be a freelancer who does a lot of traveling, this could be particularly important to guard against the

General liability insurance is essential in protecting your business in case something goes wrong with a client. This is easy to find; I recommend talking to an insurance professional both about general property insurance and liability insurance – both of which can be deductions!

4. Contribute to Retirement

Contributing to your retirement is a crucial part of being a freelancer; we have to make sure we can take care of ourselves in the future and setting aside money every month (even if it’s just a little at first) is important. Talking to a certified financial adviser about what might be affordable for you and about your choices on types of plans is definitely advised

5. Trade Services

For many of us, managing money is not in our skillset. I’m a graphic designer, not a tax professional. To be honest, keeping up with all the updates in design software is difficult enough! I don’t have the bandwidth to keep up with tax law change as well!

In order to keep my money matters in check, I trade services with my bookkeeper. I highly recommend using your expertise in trade for any services that are beyond your scope. With my bookkeeper, I give my expertise in web design and development in exchange, my finances are kept up to date! It’s a win-win
I hope these tax tips for freelancers have helped you. If you’re like me, at the end of the day you want to be able to serve your clients without having to worry about the financial and tax side of the business. Keeping bases covered as you go throughout the year will help you feel confident and less overwhelmed and allow you to keep your focus in your zone of genius.

If you’re reading Tax Tips for Freelancers because staying on top of your finances is a goal of yours for the next year, you might enjoy my post on ditching New Year’s resolutions and instead using this method.

For more freelancing tips, be among the first to receive notice of my new podcast, getting ready to drop soon! Sign up here:

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