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Working for yourself has many benefits; having to figure out your taxes is not one of them. While companies automatically deduct them from their employees’ paychecks, freelancers must diligently track these figures. Moreover, tax season doesn’t come once a year for entrepreneurs; it has to be considered year-round. If you need assistance with tax preparation, here are some tips for avoiding stress and filing successfully.

Tax Preparation Insights for the Self-Employed

1. Stay on Top of Your Paperwork 

If the IRS audits you, you will be responsible for proving the income and expenses reported on the tax return. As such, it’s imperative to keep track of all this information throughout the year. Organize all receipts and file them, so they’re easily accessible.

2. Take Advantage of Deductions 

tax preparationMany freelancers don’t take full advantage of all the available tax deductions because they aren’t aware of them. Figure out where you can save before filing, so you can use all business expenses to offset your income. 

3. Contribute to an IRA 

When you’re self-employed, you can’t pay into a 401(k), but an IRA account is a good alternative. It allows you to save toward retirement and offers another tax deduction to list on your return. Any contributions you make are pre-tax, which also lowers the amount of income you have to claim. 

4. Set Money Aside for Tax Payments 

Taxes are meant to be paid continuously throughout the year. While employees have them withheld by their employer, freelancers must be accountable for making estimated quarterly payments. Failing to do so can create a problem at tax time if you don’t have enough cash to cover what you owe. Prevent this by allocating a percentage of each paycheck in advance. 

5. Hire a Professional 

Filing as a freelancer can be complicated, so it’s usually beneficial to hire a tax preparation professional to ensure your return is filled out correctly. They will know how to properly document each of your transactions to reduce the likelihood of getting audited. Accountants are also aware of the latest tax laws and how they apply to your situation, as well as how to maximize your deductions. 

 

Successful freelancers make tax preparation a priority. The team at Selph and Friday, CPA, assist Texarkana, TX, entrepreneurs with their returns, and have earned a reputation for accurate and high-quality services. With their expert guidance, you will have peace of mind that your tax obligations are handled correctly and on time. Call (903) 792-0281 to discuss your needs today, or visit them online for more information about how they can assist. 

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