| a freelancer is a great way to make use of your skills | | | | Number, or EIN. So long as you don't have employees, |
| and entrepreneurial mindset. You find the clients and do | | | | this is more of a personal preference, unless you also |
| the work, yet you're still your own boss. But there are | | | | do certain things within your business. Many people |
| serious tax implications. | | | | would rather use an EIN than a Social Security Number |
| Before getting started I will note that I am not a tax | | | | for business dealings. These are easily applied for. |
| professional, and you should get professional advice | | | | The biggest challenge is figuring out deductions. This is |
| for your particular situation. However, some tax issues | | | | one area where I strongly recommend sticking with the |
| are the same no matter your business. | | | | advice of a tax professional. The rule of thumb is that |
| How you handle your taxes depends in large part | | | | if it has to do with your business there's a good |
| upon how you file. Are you self employed, an | | | | chance you can deduct it, but you need to be very |
| independent contractor or did you set up a | | | | clear on what is for your business versus your |
| corporation? The self employed or independent | | | | personal use. Some items can be partially deducted if |
| contractor will need to fill out a Schedule C tax form | | | | you use them both personally and professionally, and |
| while the incorporated business will need to fill out the | | | | there are various rules for mileage and the like. |
| forms appropriate to their needs. | | | | The home office deduction is a popular one and also a |
| If you earn at least $400 combined from all sources | | | | major audit flag, so if you're eligible to take it make |
| throughout the year you will need to pay taxes. If you | | | | sure you do it right. The space must be exclusively |
| expect to owe at least $1000 in taxes you will need to | | | | your home office, not for other uses. It's easy to |
| pay estimated taxes quarterly. These are the two | | | | abuse this deduction, which is why you are more likely |
| most basic facts you need to be aware of. You can | | | | to get audited if you claim it. However for many |
| file your estimated taxes by using Form 1040-ES. My | | | | freelancers it is a legitimate deduction. |
| personal favorite way to handle quarterly taxes is | | | | Running a business has many tax advantages but also |
| through which is run by the federal government. You | | | | many pitfalls. While I can give you a rough idea as to |
| can even schedule your payments in advance if you | | | | what to expect within an article, overall you need to |
| don't want to have to think about it throughout the | | | | talk with a professional about your exact situation. A |
| year. | | | | professional can help you find deductions you didn't |
| One of the most common questions I see people ask | | | | know about as well as warn you if a deduction is |
| is whether or not they need an Employer Identification | | | | inappropriate, so long as you are honest with them. |