If you go through the various databases and Legalzoom reviews in the business and tax law section, you’ll discover the many requirements to be self employed. Despite the ease with which you can just start your own business these days, managing your own business as a self employed individual can be a little tricky when it comes to taxes.
You and Your Taxes
When you are self employed, you are responsible for all of your tax payments. This includes everything that your former employer took out of your check including social security and Medicare. Many folks who are self employed tend to wait to take out money for their taxes until the tax bills roll around. Do not do this.
As difficult as it may be, it is very important that you take the money off as soon as your clients pay you and set it into another account. Otherwise, you risk not having the funds when it’s time to make the payments, and the IRS does not have a reputation for being the friendliest of collectors; however, according to a prominent lawyers and legalzoom reviews; this can be rather tricky as, depending on how much you make and the state you live in, the amount of taxes you will be required to pay will vary. To be on the safe side, always overestimate what you will need to take out of your taxes. Taking off 35% is painful when times are tight, but you will be thankful you did when the tax season comes around again.
Simplest Tax Filing Solution
To make this process easier, one of the best things you can do is to purchase a software package that handles taxes for the self employed. This will help you to make sure that you classify the information correctly and submit it in proper form. Trying to handle it by hand using only the forms and guidance which the IRS provide can make matters much harder than they need to be. And being self employed, you need as much of your time free for work as possible.
Make Sure That Your Business Deductions Are Really Business Deductions
You may be tempted to use business deductions to indulge. After all, it seems like a great perk of being self employed. To an extent, you can do this if your business deductions are reasonable, but you should always make sure that the items you purchase are being used for business purposes. For instance, you can purchase a computer and use it as a deduction if it is for business purposes. However, the IRS is very strict in its requirements that it must be used only for business purposes. In other words, if you use that business computer for shopping, playing games, or even just amusement browsing and the IRS finds out, you may not be able to take that deduction, and you may even be penalized.
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