The life of a freelancer is one of excitement. Seriously, you never know from one week to the next what your income will be for that day, week, month or even year. You can set goals but sometimes you exceed them and others, you fall short.
Some people might call that nerve wrecking. I call it hustle motivation. I’ve never done anything the easy way. I like forging my own path but let’s not get silly, I don’t like making things harder than they need to be. Though I’ll admit, figuring out how to file taxes as a freelancer was difficult in the beginning.
For me, freelancing was an answer to the dilemma of how to be in two places at once; at work and with my children. After giving birth to our first daughter, I knew I wanted to be a stay-at-home mom. I knew that I wanted to be very hands-on and, lucky for us, we could survive on one income as a 3-person family. That worked for a minute until we got pregnant again and suddenly, we needed that extra income. Babies aren’t free, ya’ll.
I learned real fast that babies burn through money at an alarming rate and when there are two, they go through it twice as fast. I took a job tutoring college students in English and editing college research papers online. It really was perfect but it reminded me how much I truly loved writing myself, and my daughters provided more material than I could have possibly imagined. It seemed like they were always getting into one thing or another so after a couple years of blogging on the side, I was able to quit my tutoring job and focus on freelance writing exclusively.
This gave me the freedom to work from home while staying home with my girls. I had the best of both worlds. I never had to miss a recital, match, meet or dance. I didn’t get much sleep in those days because work-from-home mom is code for most exhausted woman on the planet but we were all so happy, I didn’t care.
That’s where I am still today, blissfully exhausted doing what I love while getting to spend time with the people that I love. Being a freelance writer is a dream come true in most aspects but it can be a little trying at tax time because when you’re a freelancer, taxes are not withheld from your check. I used to joke with my husband that it was “free money”, you know, like in college when they were handing out credit cards in the quad with t-shirts to anyone willing to take them? Credit card money isn’t real money, right? WRONG!
It’s awesome getting your entire paycheck until you actually do your taxes and realize that you need to come up with thousands of dollars in a short amount of time because you owe the government. Then it’s not so awesome not having taxes withheld. Freelancing is an act of restraint. For me, it took a few times for the lesson to take. I’ve finally learned.
Here are a few easy, practical tips that I’ve learned over the years to make doing taxes as painless as possible so that you can enjoy your life with the people you love;
Receipts: Keep your business receipts in a safe place. Don’t crumple them up in jacket pockets and in car consoles. Have a designated place for those receipts and if you are really thinking ahead, I like to write exactly what I used it for (which post) because believe me on April 14th, they all look the same. If possible, I highly recommend digitally scanning all receipts in ASAP.
Know Your Deductions: As a freelancer, you really need those deductions to off set the amount you will owe, especially with all that “free money” floating around. Remember, you can deduct things like your home office up to 300 feet at $5 per SQ foot, domain and web hosting, telephone and internet expenses, legal and professional services to maintain your website, education (all those online courses that you bought to improve your SEO), office supplies and equipment and even a percentage of business meals and so many more. Oh and don’t forget about these Top 5 overlooked deductions.
Put money in a designated business banking account: My personal suggestion is to have business savings and checking accounts. All that “free money” that should be withheld in taxes, be smart, put it in that savings account and let it gain some interest. Take the rest and put it into your business checking account. Then, not only do you have your business earned money readily available to you, you will have a digital trail of what you spent. You might need that for reference later.
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I was selected for this opportunity as a member of CLEVER and the content and opinions about how to file your taxes as a freelancer expressed here are all my own.