The freedom to select clients and working hours are some of the perks of becoming a freelancer. Before you become a freelancer, it is wise you learn more about the taxes you will be paying. You need to know that taxation works differently between the freelancers and the employed people. To know taxation for the freelancers works it is smart you search for the best website to guide you. You will aim to ensure you pay your taxes on time as a freelancer. Below are the crucial considerations for the employees vs. freelancer taxation.
For the employees, the employers are responsible for handling their income taxes. Therefore, the paycheck you receive as an employee has various deductions already made. Therefore, the employer is the one who will make your tax payments and direct other voluntary deductions. The amount you pay in taxes as an employee will depend on your income and where you work. Also, other factors such as the number of dependents will influence the taxes you pay. It is smart you view this website that will guide you to know the taxation forms to use when you are employed. You should also get more information on your State taxation.
When you are a freelancer, you need to understand that you are responsible for handling all matters relating to taxation. Your clients will not deduct the taxes from the money they pay you for the services you offer to them. You need to ensure you keep accurate records on the money you receive from clients for a given duration to use the amount to determine the taxes you will pay- It may be challenging for new freelancers to handle the complex taxation process. You need to discover more on things that you can use to calculate the taxes as a freelancer. In some instances, it may be wise to get the help of a tax consultant, especially when you are new in the freelancing field. The other option is to find software that you can use to calculate the taxes when you are a freelancer. It is, therefore, wise you examine these options to decide the one that will work best for you. The other thing is to learn more about the tax write-offs you are eligible to get as a freelancer.
Therefore, if you are considering venturing into the freelancing field, you should keep track of all the money you get from clients. You may opt to use a spreadsheet to keep track of the money you have earned in the years.