Freelancing has its perks, but tax season is always nerve-wracking.
I’ve heard plenty of cautionary tales about audits and losing out on deductions. Is there a straightforward principle that can help keep freelancers on the right side of the taxman?
Keep a detailed record from the start. Document every receipt, drive, and expense no matter how minor. A basic spreadsheet works fine. I snap pictures of receipts as soon as I get them.
Pay taxes quarterly instead of putting it off until April. Set aside 25 to 30 percent of each payment in a separate account. The IRS prefers no surprises, and you certainly don’t need penalty fees later.
Just save receipts in a shoebox and don’t mix business money with personal stuff.
I just collect papers and do it when needed.
Track everything but keep it simple. I use a folder for business expenses and another for income records.
The main thing is to separate business and personal spending. If you don’t have one yet, get a business account.
Also, find a good accountant familiar with contractors. They know deductions you might miss and can save you more than their fees.