Tax Tips for the Self Employed

Being self-employed has a lot of great benefits. One drawback, however, is the fact that taxes can be a bit complicated for the self-employed. In many cases, these individuals even have to pay a special self-employment tax.     

Even though taxes can be a burden, know that, with the right help, you can more fully understand the taxation process for the self-employed. And, the more fully you understand it, the more likely it is you’ll be able to work it to your advantage.

To take a step in the right direction, tax-wise, start by following these simple tips.

Estimate Your Income Each Year

First things first, make sure you estimate your business income each and every year.

Having an accurate idea of about how much you can expect to earn will help you to make the most beneficial tax-related decisions all year long, such as knowing which exemptions to file for.

Furthermore, when you estimate your income, you can also estimate your taxes, which gives you time to save what you’ll owe.

While you can estimate your income on your own, it’s better to do so with the help of a tax professional who can also provide advice and tax strategies to consider during the year.

Invest in Personal Finance Software

When you’re self-employed, it’s imperative that you keep detailed and accurate financial records related to your business. This will help you with your taxes, but will also be vital in the event that you are ever audited.

To make recordkeeping easier, invest in quality personal finance software, preferably the kind that can be synced to your bank account. This software, if used properly, will make tax-time so much easier and less stressful.

Choose Business Deductions when Possible

Finally, whenever you have the choice between making something an itemized deduction or a business expense, always go for the latter. Businesses expenses allow you to reduce your income and your self-employment tax, making them the smarter option in almost every circumstance.

Following these simple tips should get you off on the right foot. Really, though, it’s best to work closely with a tax professional and educate yourself as much as possible so that you can make it through self-employment taxation with ease and confidence.