The flexible working hours and being in charge all some of the things that are motivating many Americans to become freelancers. Therefore, if you are considering making this move into the freelance industry, you need to get insights on the taxation. Understand that the employees’ taxes are different from the self-employed people. Hence, you need to look for a genuine website that will guide you know the taxation guidelines for freelancers. You will aim to ensure you pay your taxes on time as a freelancer. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
The employer handles the taxes for all his employees. You will therefore receive a salary that is less various deductions made by the employer. The employer will withhold your income tax for the month and make other voluntary deductions. The amount you pay in taxes as an employee will depend on your income and where you work. Some people get tax relief to reduce the taxation burden due to various issues such as having many dependents. It is, therefore, wise you find a genuine website that will assist you to know the various tax forms to use when you are an employee. You should also get more information on your State taxation.
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. To ease calculating the taxes to pay as a freelancer, you need to keep track of all your earning for a given period. When you are a new freelancer, it may be hectic to decide how to best calculate the taxes to pay. You need to discover more on things that you can use to calculate the taxes as a freelancer. In some instances, it may be wise to get the help of a tax consultant, especially when you are new in the freelancing field. The other option is to find software that you can use to calculate the taxes when you are a freelancer. It is smart you examine these two alternatives, see the cost of each to identify the one to employ. You can deduct certain expenses from your income as a freelancer reducing the amount you pay in taxes.
Therefore, if you are considering venturing into the freelancing field, you should keep track of all the money you get from clients. Consider using spreadsheets to input your income after every work, record the money you earn and the expenses you incur.