Being a freelancer gives you the control to decide when to work and the clients to choose. Therefore, if you are considering making this move into the freelance industry, you need to get insights on the taxation. The reason is that freelancers taxing works different from that of employees. You require to find online platforms that will assist you to know how the taxes work for self-employed people. The target is to avoid problems with the IRS. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
For the employees, the employers are responsible for handling their income taxes. The money you get when you are employed is less different from voluntary and mandatory deductions. Therefore, the employer is the one who will make your tax payments and direct other voluntary deductions. The taxes you pay when you are employed will be determined by how much money you earn and the State you work. Also, other factors such as the number of dependents will influence the taxes you pay. To know more about the taxation forms to use when you are employed, you need to find the best site to use. The other thing is to check the state and local taxes that you are required to pay depending on where you live.
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. It is wise you look for resources that will guide you on how to handle this task. Some freelancers opts to hire accountants to help them when calculating the taxes and ensure they pay them on time. You also need to weigh the alternative of getting a simple to use taxation software to use when you are new in the freelancing industry. It is smart you examine these two alternatives, see the cost of each to identify the one to employ. You also need to get more information on tax write-offs you can get when you are a freelancer.
Therefore, if you are considering venturing into the freelancing field, you should keep track of all the money you get from clients. Consider using spreadsheets to input your income after every work, record the money you earn and the expenses you incur.