Crucial Considerations for the Employees vs. Freelancer Taxation
The flexible working hours and being in charge all some of the things that are motivating many Americans to become freelancers. Before you become a freelancer, it is wise you learn more about the taxes you will be paying. The reason is that freelancers taxing works different from that of employees. Hence, you need to look for a genuine website that will guide you know the taxation guidelines for freelancers. You will aim to ensure you pay your taxes on time as a freelancer. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
The employer handles the taxes for all his employees. You will therefore receive a salary that is less various deductions made by the employer. When you receive your paystub as an employee, it will show the various deductions that the employer has made. 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. 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. The money you receive from clients does not have any withholding taxes. It is therefore up to you to keep a good record of all the incomes for a given period to decide the total amount to pay in taxes. When you are a new freelancer, it may be hectic to decide how to best calculate the taxes to pay. Therefore, you need to get more information on how you can ease your work. In some instances, it may be wise to get the help of a tax consultant, especially when you are new in the freelancing field. Other prefer to invest in an accounting and taxation software, where they input their incomes and the software calculate the taxation. You should therefore compare these two options to determine the one to use. The other thing is to learn more about the tax write-offs you are eligible to get as a freelancer.
It is thus crucial you keep a record of the income you earn as a freelancer for a given period. You may opt to use a spreadsheet to keep track of the money you have earned in the years.