Key Things to Know About the Freelancer vs. Employee Taxation
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. Understand that the employees’ taxes are different from the self-employed people. To know taxation for the freelancers works it is smart you search for the best website to guide you. The target is to avoid problems with the IRS. Read more now to see the vital items to learn about the freelancers versus employees taxation.
When you are employed, your employer will be handling the taxation on your behalf. The money you get when you are employed is less different from voluntary and mandatory deductions. Therefore, the employer is the one who will make your tax payments and direct other voluntary deductions. The amount you pay in taxes as an employee will depend on your income and where you work. Also, other factors such as the number of dependents will influence the taxes you pay. 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.
If you decide to become a freelancer, you need to know that you will be managing all things relating to the taxes you pay. 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. 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. It is smart you examine these two alternatives, see the cost of each to identify the one to employ. The other thing is to learn more about the tax write-offs you are eligible to get as 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.