If you’re a freelancer, you may be responsible for paying taxes yourself. This guide shows 5 tips for budgeting for taxes as a freelancer.
Freelancers are a rapidly growing group of the workforce these days. While there are some wonderful perks that come along with the freedom of freelancing, there are also some unique challenges it can present.
If you’re new to freelancing, you’ve probably had to think about how budgeting for taxes will work. The good news is, there are some simple things you can do to stay on top of things, so you’re not scrambling or going broke when tax day rolls around.
Make Budgeting For Taxes Simple
Trying to save for tax season can seem like a daunting task. It’s hard to know how much you’ll need to have set aside. These five tips will make it easier to keep track of your income and create a budget that makes things simple.
1. Learn About Taxes
First things first, you need to know what percent of your net income to take out for taxes. Don’t forget about self-employment tax on top of your regular income tax.
It will take a little bit of work to sort it all out, but it will save your butt in the long run. H&R Block has an app specifically for freelancers that can help you stay on track.
2. Make Your Own Pay Stubs
When you’re working for someone else, you have regular paycheck stubs to help you keep track of how much you’ve made and let you know how much has been taken out in taxes.
Fortunately, you can make stubs for yourself with a paycheck stub maker to help you track your income. They are easy to use and make budgeting a whole lot easier.
3. Utilize Apps
Take advantage of the technology that’s available these days. One big perk of a growing freelance workforce is that companies have started creating some extremely helpful apps for freelancers.
These apps can make budgeting much simpler, allowing you to focus on what’s most important for your business.
4. Open a Business Bank Account
You want to keep your business expenses and your personal expenses separate. Opening an account strictly for your business makes sure you don’t blur the lines between the two.
5. Know Exactly How Much Everything Costs
It can be easy to feel like you’re making enough money when taxes aren’t automatically coming out of your paychecks. When you factor in healthcare, taxes, and business expenses, suddenly, you’re not making as much as you thought.
Sit down and account for everything you need to spend money on and exactly how much it all costs. It’s hard to make a budget when you don’t know how much you need.
Keeping It All Straight
When it comes down to it, budgeting for taxes may seem like an overwhelming consideration, but it’s actually easier to do than you’d think. Follow these tips to keep yourself from being shocked when it’s time to pay your taxes.
Looking for tips and tricks to help you navigate the changing workforce? Check out more helpful articles here on our blog.