FFN #30: Tax Talk: Decipher & Survive!

📝 Prepare!

Rule number one of doing your taxes is to prepare. Seems… well obvious right? Many people think they are keeping great records when they aren’t. Keeping a great record of your income and expenses can make a HUGE difference on your tax bill. We recommend a tool like Found or Quickbooks for accounting software that is designed for freelancers. The two main areas you must be tracking and have organised receipts for are: 

• Your Income

Sounds silly to state the obvious. However, when you have multiple client projects happening throughout the year it gets easy to forget how much has gone into your account. You only receive 1099’s from clients who have an invoice of over $600 so any smaller projects must be self-reported. 

• Your Business Expenses 

Business expenses are a freelancer’s saving grace when it comes to tax. Throughout the year it can get really easy to lose track of what you have spent on your business. It’s crucial to keep track of your expenses so you can lower that hefty tax bill, we love using The Productivity Method’s digital planner to track our business expenses and keep receipts. Here are just a few things you can claim; advertisements, computer repairs, subscriptions, phone bills, rent, interest on business cards, travel costs and much more! 

💸 Filing and Paying

When you get to this stage you should have a complete record of everything you have earned and spent which should make the process of filing a little less of a headache. Paying your taxes quarterly is important for reducing your tax bill. Use the form 1040-ES to file your estimated taxes. It’s a good idea to save a portion of your earnings each time you get paid to go towards your tax bill, we like to open a savings account so we aren’t left scrambling to find money. A few good forms to have on hand: Form W-9, which a client may ask you to fill out when you take on a job, and Form 1099 if you receive $600 or more from a client or customer, they should issue you a Form 1099-NEC (Nonemployee Compensation) to report the payment. This form is critical for accurately reporting your income to the IRS. For your annual income report, you will need Form 1040 to self-report exactly what you’re earning.

👩🏼‍🔧 Find a Professional

While you can do your own taxes, we recommend finding a professional as they can help you get so much more out of your return and can prevent you from filing incorrectly which can lead to unwanted fines. A great accountant can help you save on your taxes, reduce the amount of time you’re spending filing which means you can be spending time working and save you from getting audited unnecessarily. If you’re on the lookout for an accountant, we suggest posting on our Jobs Board (it’s free!).

Lesser Evil

With the warmer months rolling around my 2 pm snack hour has me looking for something a little lighter. Cue Lesser Evil’s popcorn snack box, filled with all their fun flavours! I love that their popcorn has fewer and all-natural ingredients so I’m left feeling nourished after my snacking.