Freelancing gives you freedom, but it also means you’re responsible for your own financial record-keeping – something a paycheque used to handle for you. Here’s what to know if you’re just getting started.
Track everything, from day one. Every payment you receive and every business expense you pay should be recorded. Waiting until tax time to piece it together is stressful and error-prone.
Set money aside for taxes. As a freelancer, taxes aren’t automatically withheld from your income. A common approach is setting aside a percentage of every payment you receive into a separate account, so you’re not caught short later.
Know what you can deduct. Home office space, a portion of your phone and internet, business software, and professional development costs may all be deductible, depending on your situation. Keeping receipts organized throughout the year makes this much easier at tax time.
Separate business and personal finances. Even as a sole proprietor, a dedicated business bank account makes tracking income and expenses far simpler.
Get help before problems pile up. A short consultation with an accountant early on can save you from costly mistakes later, and help you understand what’s normal for your specific type of work.
We work with freelancers and independent contractors across a range of industries, remotely or in person. If you’re not sure where to start, we’re happy to help.
1 Comment
Rouslan
Juggling contract programming and side web development gigs means my income comes in from a few different places. Setting aside a percentage for taxes from every single payment is the only way I keep from getting completely stressed out when tax season rolls around!