If you are working as a freelancer, or have declared yourself a sole proprietor, you will most likely have tax obligations at the end of the year, depending on the amount of income you earned.
People that are considered “employees” and get a W-2 issued at the end of the year will have Social Security and Medicare is taken out of each paycheck. Typically, these taxes are shared… with the employer and the employee each paying half. Because you are self-employed, you will pay both parts, the employer and the employee part. This is your self-employment tax, and it’s to cover your Social Security and Medicare obligations.
Being a freelancer or sole proprietor does not get you off the hook for your regular income tax. You should be keeping 25%-30% of your freelance income set aside for taxes, so you don’t fall short when it’s time to pay them. You will file a Form 1040 on April 15th for your personal tax return and record all business income and expenses on a Schedule C form.
For many sole proprietors and freelancers, the income they earn may be significant and require the to file Quarterly estimated taxes. These are paid four times a year according to a schedule, with payments due on April 15, June 15, September 15, and January 15, each for the preceding quarter.
Getting Help from the Pros
For most people in business, using an accountant is preferred, and can give you real peace of mind…Things may occur that are out of the ordinary when you are preparing a Schedule C form for your business. There’s a lot to remember and be aware of, and the tax preparation language can be confusing. These are examples of the type of work we do every day for our business clients. Our role is to look for ways to legally reduce your tax burden, allowing you to put more money in your pocket, and more money into your business. We prepare your tax forms at the end of the year. You’ll receive help with your Quarterly estimated filing as well.
Customers Come First!
As a client, you’ll receive ongoing support throughout the year, and we’re available to answer questions when you call. At JStevens Accounting, customers come first, and we can work through your business tax strategy with you!