Freelancers enjoy a level of freedom that traditional employees don’t, but they do have additional financial responsibilities. Whether you’re self-employed full-time or just deliver food on the weekends, freelancers who make more than $15,000 have to prepare and pay their own taxes every quarter. Below are a few tips for setting up a savings account, getting your taxes in on time, and avoiding costly IRS penalties.

What to Know About Tax Preparation as a Freelancer

1. Calculate Your Self-Employment Tax

In addition to state and federal income taxes, every worker has to pay Social Security and Medicare, a cost that is normally shared with the employer. However, self-employed workers have to pay the entire amount themselves, which adds 12.3% to your tax bill.

2. Open a Dedicated Savings Account

While company employees only have to pay taxes once a year, self-employment taxes are due every quarter. Having a savings account dedicated to tax payments will help you avoid accidentally spending these funds, which could leave you with a hard-to-pay bill.

Contributing to your savings account on a regular basis will help minimize the financial hit when the payment is due. Depending on how often you receive payments, you may want to set aside tax funds on a weekly, biweekly, or monthly basis.

3. Prioritize Paying Your Taxes

Every dollar counts when you’re working for yourself, so it may not seem like you can afford to pay taxes every month. However, failing to pay is even more expensive in the long term, triggering fees and penalties that can add thousands of dollars to your bill.

4. Keep Detailed Records

Forgetting to claim income can result in unexpected tax bills or even an audit, so keep detailed records of every payment you receive. Self-employed workers can also take advantage of a variety of deductions and credits, including business lunches, work-related computer programs, and travel expenses, so file away receipts for every business-related expense.

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