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Taxes for Freelancers: 10 Must-Know Tips for a Stress-Free Tax Season

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Taxes for Freelancers: 10 Must-Know Tips for a Stress-Free Tax Season

The U.S. now has more than 56.7 million freelance workers and many don’t understand taxes for freelancers.

I’ve been a full-time freelancer since before 2010, so saying I do have a clue about this is an understatement BUT this is NOT tax advice. These are just tips and you should speak to a professional if you aren’t sure about something.

Before we get into the taxes for freelancers tips, I do want to answer a couple of important questions that I had when I first got started. I will also let you know why this matters.

Do I have to file taxes as a freelancer and how much money do I have to make to file my taxes as a freelancer?

As a freelancer, if your gross income is $400 or above, you have to file taxes. You shouldn’t assume that the IRS knows there are expenses that reduce your income. If $400 comes into your business PERIOD, you need to file or you can get into trouble.

While you won’t get in trouble if you don’t owe taxes or if the IRS owes you a refund, do you really want to bank on your tax skills? Just file.

When I say trouble above, we are talking fees out the wazoo and the longer you take to take care of those pesky taxes, the more those fees are going to be. #facepalm

Are freelancers self-employed?

You may have heard that the self-employment tax is 15.3% and you want to know if you’re self-employed as a freelancer. Yes, you are self-employed as a freelancer.

Now that you’ve got the answer to some of the most commonly asked questions when it comes to taxes for freelancers, let’s get into those tips!

1. Know Your Business Structure When Dealing With Taxes for Freelancers

As a freelancer, you need to know your business structure to know how you’ll be paying your taxes.

While business structure can be confusing when you’re starting out, it’s important to get this right as early on as possible.

As a sole proprietor, you are the one that is responsible for all profits and debts.

As a partnership, you’re in partnership with someone and it can either be a general or a limited partnership.

As a limited liability company, you get the benefits of a partnership without being personally reliable like you are as a sole proprietor.

As a corporation, it’s a little more complicated and most freelancers don’t opt for this structure, but if you want to — have at it. Just make sure you understand what it entails.

2. Keep Track of All of Your Income

Organization is your friend. Don’t fight it.

Whether you keep records physically or you have online records of your income, make sure they are organized so you can easily access them. When tax time comes around, you need to be able to easily show where your money came from and how much it was.

You may have some 1099s from clients but if you’re like me, you might get paid through PayPal or other payment methods.

While PayPal does give 1099s to some of its users, you have to have at least 200 transactions and a minimum income amount to get a PayPal 1099.

If you can’t get a 1099 from PayPal to show your income, go into your transactions and filter all income transactions from clients and then screenshot each of those pages of transactions as proof of income.

3.  Use a Tax Software or Accountant to File

Goodness me, please don’t try to file your own taxes. Just don’t.

Why not?

Because having a tax professional or a tax software on your side to defend what’s on your taxes in case of an audit can really put your mind at ease.

If you do your own taxes, your only defense is that you didn’t know and most of the time — that isn’t going to fly.

4. Ready Yourself for the Self-Employment Tax

If you weren’t aware of the 15.3% self-employment tax, this can come as a real punch in the mouth.

You can pay these taxes quarterly, so it makes it a little easier going out or you can pay it at the end of the year in a lump sum.

5. Consider Making Estimated Payments

As we stated in the point above, you’re going to have to pay self-employment taxes. Each quarter, you can pay estimated payments which make it a lot easier for you at the end of the year.

On April 15, June 15th, September 15th, and January 15th, you can pay what you estimate your taxes to be for that quarter. As we said above, you don’t have to do this but if you don’t think you can stomach paying the whole bill at once, this can be a good option for you.

6. Understand Deductions

If you don’t understand what you can deduct from your income for expenses, you might be overpaying in taxes. Here is an example of some things but don’t forget to ask a tax professional if you aren’t sure.

  • Marketing
  • Advertising
  • Travel for business
  • Office furniture
  • Computers
  • Software
  • Services
  • Supplies

If you have other expenses that you believe are related to your business, don’t assume since this can get you into big trouble if you’re audited.

7. Consider Claiming the Home Office Deduction

Since I live in an RV and don’t have a dedicated space, I’m not able to use the home office deduction, but you should look at the requirements and see if it is available to you.

8. Know If You Will Contribute to a Retirement Account

You might not feel like you’re making enough money to contribute to a retirement account right now and you might be right. If you can’t survive off your income and contribute then at least keep it in mind for the future.

There are a few types of retirement accounts you can consider as a freelancer when you’re looking at taxes for freelancers and investing in your future. These are:

  • Solo 401(k)
  • SEP-IRA
  • IRA

9.  Categorize Your Business Expenses

I decided to put this at the bottom since most people aren’t going to go to all this trouble and will probably just drop a box of receipts on their CPA’s desk, but as a best practice, you should categorize your business expenses.

The better your records are, the more tax savings you’ll be able to enjoy.

10. Consider Using an HSA (Health Savings Account)

Having an HSA allows you to pay for qualified medical expenses on a pre-tax basis, which means that you’ll be able to cut your tax bill.  Before you get excited, you need to research how HSAs work and how they can help you.

Now You Understand Taxes for Freelancers

Good on you for getting through all of this and getting a good grip on taxes for freelancers. Now it’s time to go out and take care of those taxes.

Do you want to learn more about personal finance and other important topics? This site is full of articles that are well-researched and brought together to help you live a happier and healthier life.

Check out some of the other articles on the site, drop a bookmark and come back soon.

taxes for freelancers

How to Make Sure Your Online Business Stays Alive in 2020

How to Make Sure Your Online Business Stays Alive in 2020

While many small businesses don’t make it past their fifth year, you want to make sure you know how to make sure your online business stays alive in 2020. I originally wrote this post in 2018 and I will continue to update it each year with the best business strategies for the year.

Continue reading this article as I share success tips for your business for  2020 and beyond.

How to Make Sure Your Online Business Stays Alive in 2020 – Must-Dos

No matter how scared you are to learn new things, you have to start branching out. Of course, it is going to be difficult to learn new things if you aren’t already somewhat skilled in that area, but if you want to remain on top in 2020, you are going to have to learn to go with the flow.

Now let’s get into what you need to do.

Make Sure Your Business Is Stable Without You

You don’t want to create a business that needs you to run. To make sure that our business continues to be successful in 2020, you want to put systems and people in place so your business can run successfully without you.

Below is a really good video from Dan Lok that goes over building business systems for your business. He hits some points that are a little sensitive for many people, so make sure to give it a listen.

Make a Decision for Your 2020 Business Year

You should already be well on your way with what you are going to do with your business, but let’s face it, a lot of people still have no clue as to what they are doing next week let alone for the entire year of 2020.

The place where people get stuck and go backward in their business is when they do not make any decision. It’s like they are in limbo. The best thing to do is pick a strategy and if it is wrong, that is going to come out soon enough and show itself and you can change what needs to be changed.

Create a Winning Online Marketing Plan

The most important thing you need to remember is that you have to become a marketing master to get noticed online. You can’t go lax on your online marketing plan if you want to be successful online. There are thousands and thousands of other websites that want people’s attention and you need to get to work to get eyeballs on your content.

Content Marketing

In 2019 and into 2020, there’s a lot of competition but there are things you can do to get noticed. One of the things you have to do for your content marketing plan is to create content that is truly helpful for people.

Sometimes you’re going to want to put out content that is okay instead of great content, but please don’t!

That content is not going to do well and you’re going to harm your good reputation.

Think about the platforms that you want to target and give the people on each of the platforms you choose what they want. People viewing Instagram are in a slightly different mindset than those on Facebook and even more so when you look at people on LinkedIn.

PPC

If you don’t know what you’re doing with PPC (pay per click) marketing, you can sink a pretty penny into your campaigns. Before you get started in this area, either hire someone to teach you or hire a company to do the ads for you.

PPC is a great way to get your message in front of people quickly. If you lack patience and want to get your message in front of people quickly so you can keep your business alive in 2020 then this is a good option.

Facebook Ads

Facebook ads can be an inexpensive way to get more people to your offers. As more businesses venture onto Facebook and start using ads, it is going to get more expensive, but right now — it’s not bad at all!

Again, if you don’t know what you’re doing — hire out!

SEO

SEO (search engine optimization) is when you optimize your page to rank for a certain term that you want it to show up for in search engines.

Investing time or money in SEO is a wise strategy for the years coming and can continue to bring you long term success.

Learn what SEO techniques are currently working and put them into practice right away to start building up your organic search traffic.

Social Media Marketing

With billions of people using social media, don’t turn your nose up at it.  You might think it’s only for socializing but it’s a great way to build a relationship with your potential and current customers. You’ll also find people are more than happy to click through to sales pages and often buy after coming to your site from social media.

YouTube Marketing

Almost 2 billion people use YouTube and you need to be on the platform. Even if you don’t want to be on camera, you can create great videos by using PowerPoint slides or screen captures. Get creative and get some videos on YouTube for your business.

How to Make Sure Your Online Business Stays Alive in 2020 – Now You Know

Now you know how to make sure your online business stays alive in 2020. Use these tips to keep your business going for many years.

Do you have any tips you’d like to share with your fellow business owners or a question? Feel free to drop them below.

business stays alive

Saying Goodbye: How to Know When to End a Relationship

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Saying Goodbye: How to Know When to End a Relationship
Couple Relaxing

Knowing when to end a relationship can be difficult. Whether you’re talking about a romantic relationship or a friendship, these connections can form very deeply and work their way into our identity.

 

You’ve been through a lot together but there’s got to be a reason that you’re questioning your relationship, right?

 

 

Even if you still love that person, that doesn’t mean that the relationship should go on. Continue reading this article to learn more about when you should put an end to a relationship.

 

When Small Things Add Up to Big Things

 

Something terrible doesn’t necessarily have to happen in a relationship for you to start noticing it’s coming to an end.

 

It could be one thing after another after another or the same small thing over and over again. If you notice these things are wearing you down, it’s time to take a closer look at the relationship.

 

As relationships age, it is easy to fall into a certain type of comfort and start taking each other for granted. The things we once thought were unspeakable, that we would never do to that person, we do them and vice versa.

 

When Deal-Breaker Behaviors You Didn’t Know About Show Up

 

 

If you find out there are deal-breaker behaviors going on and you didn’t know about them at the beginning of the relationship, it may be time to say goodbye.

 

People are oftentimes very good at hiding their true nature until they have safely embedded themselves into your life. Not only that, they might have started these bad behaviors during your relationship.

 

Some of the common things that might be deal-breakers in your relationships.

 

  • Hidden criminal record
  • Unmentioned child
  • Undisclosed divorces
  • Addictions (Current or past)

 

And there are any more you can add to the list depending on what you’re willing to live with.

 

Check Out This Video About When to End a Relationship

 

I found this amazing video by Brendon Burchard about when to leave a relationship and if you don’t already follow him, you totally should. His story is amazing and I love his message.

 

I want to go through some of the important points he went over below and give my take on them. You should also watch the video. He has a great way of explaining things.

 

 

Yeah, I know — the thumbnail is a little harsh with “When to quit on someone”, but it is what it is.

 

My Take on the Points in the Video About When to End a Relationship

 

I’ve ended my fair share of relationships and it’s not always been fun but I agree with what Brendon said in the video above. I am going to explain it my own way but I’m really glad I found the points in the video.

 

1. When There is Abuse

 

This is a major one and I don’t only think physical abuse is a good reason to end a relationship, but I believe mental and emotional abuse is a good reason to end a relationship.

 

And that goes both ways. If you’re abusing someone or they are abusing you — get out. You don’t want to be that person.

 

In this article, they actually go into 6 different types of abuse:

 

  • Physical
  • Sexual
  • Verbal/Emotional
  • Mental/Psychological
  • Financial/Economic
  • Cultural/Identity

 

If you’re experiencing any of these types of abuse — leave the relationship now.

 

Repeat Failed Discussions

 

If you’ve spoken to this person about a specific issue of extreme importance multiple times and have shared back and forth about your feelings and needs, and you just can’t get it together, it might be time to go.

 

When you can see that neither of you is going to give on the matter and it’s making you both miserable, why continue to stay and have the fight?

 

I don’t believe you should just bail on someone because they are “negative”. There are a lot of people that say you should do that and I love that Brendon points out that you don’t need to bail on someone because they aren’t 100% positive and happy.

 

3. Repeated Neglect

 

If the person in the relationship never does their part in the relationship, it’s time to say goodbye. If you’ve made the requests, had those discussions and they keep failing over and over — that’s it. There’s no reason to let people make you feel useless.

 

 

4. Repeated Lies

 

Worse than neglect, if your partner, friend, employee — whatever. If they keep telling you one thing and doing another, it’s time to tell them cya.

 

If you aren’t sure if they are lying to you, you might want to take a look and see if they are lying to others. If they are lying to other people, they are lying to you.

 

5. No Appreciation

 

Even if people say they appreciate you but you don’t feel appreciated, that’s not a healthy relationship. Talk to that person and tell them how you feel and if they still don’t come around, don’t stay in a thankless relationship.

 

It’s sad when you’ve invested a lot in a relationship, but that’s not a good reason to stay in a relationship.

 

When to End a Relationship – Only You Know

 

While we’ve talked about when to end a relationship, you’re the only one that really knows when it’s time to go but the above things are definitely signs that you need to strongly consider removing that person from your life.

 

It’s never easy to remove someone from your life, especially if you feel like you owe them something. But if it’s not working for you, it’s probably not working for them and it’s time to let things go.

 

What are your thoughts?

 

Have you dealt with things like this before?

 

Feel free to leave a comment. I’d love to hear from you.

 

when to end a relationship pinterest image