3 Essential Tax Filing Tips For Freelancers

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As Freelancers and Independent Contractors, there are many things that we have to do a little different than everyone else. Taxes are one of those things but it doesn’t have to be more difficult. Here are 3 Essential Tax Filing Tips to make things easier.

Tax Filing Tip #1: Be Organized

This is probably one of the most important tax filing tips for freelancers. When you have a regular 9-to-5 job filing taxes is generally simpler. However, when you’re a freelancer or independent contractor, it’s up to you to keep track of everything. You need to know how much money you earned, what your expenses were, and how much tax you need to pay. Be extremely organized will save you a lot of time, frustration, and pain later on.

Excel Spreadsheets

Using Excel spreadsheets has been a lifesaver for me over the nearly 16 years I’ve been freelancing. I use them to track everything. I have one spreadsheet that strictly tracks all the invoices I send to my clients, payments received with amounts and dates, and the amount of taxes from those payments that need to be put aside in my tax account. Over the years, I have figured out how much I need to put aside to cover taxes plus give myself a little bonus cash after taxes are paid.

I have another Excel spreadsheet that tracks any possible business expenses that I might be able to claim on my taxes. I also make sure to file all receipts after entering them on the spreadsheet. Some of these things won’t get used but it’s always better to have more possibilities than not enough.

Another Excel spreadsheet I have calculates the amount out of every payment I receive that needs to go into my self-made health savings, IRA, emergency, and fun accounts. Sometimes these amounts are only a few dollars and other times it’s a few hundred dollars. Regardless of the amount, I ALWAYS put the calculated amounts into their appropriate accounts without fail. Remember, every little bit helps to build a base of financial security for you.

I also have other password protected Excel spreadsheets that help me organize and keep track of important information. The key here is that without Excel I don’t know how I would keep track of everything.

Now, there are other ways to track this kind of information like using software like Quicken or QuickBooks that I also highly recommend as well. However, I still find Excel to be indispensable in my Freelance and Independent Contractor business.

Filing System

To go along with your Excel Spreadsheet system, make sure you also have a physical filing system. Create folders for different expenses like business, home, health, and more. This way when it’s time to do your taxes, you know exactly where to find everything. This can save you tons of time and frustration.

Creating a folder that is filled with anything you feel might be helpful during tax filing season is also a great thing to do. The key is to make finding and filing your taxes as easy as possible. Looking for an invoice from January 2020 in April 2021 can prove to be a challenging task if you don’t organize a filing system. I personally find these file folder jackets invaluable for keeping my tax materials together throughout the year and then when storing the year’s taxes.

Straighten Up First

This is one of those tax filing tips that might not immediately come to mind but it’s essential. Straightening up your office area BEFORE sitting down to do your taxes is also a ritual I recommend. It’s hard enough to find what you need when everything is in their place but if your office is a mess, you are guaranteeing frustration.

Take some time a few days before your scheduled tax day to clean up any mess, round up the twelve abandoned coffee cups, file any paperwork that’s out, dust and empty garbage cans. Having a clean, neat work space will not only help you find things but it will also help you focus better on the task at hand.

Tax Filing Tip #2: Schedule It

Once you have all your information together and you’re ready to start the process of filing your taxes, it’s time to schedule it. Here in our household, we schedule Super Bowl Sunday as our day to do taxes. We don’t watch sports in our house (Oh, the horror!!!). We’re both musicians but that doesn’t mean we can’t have a great party like the rest of the world does on this day.

So, we literally put it on our calendar for Super Bowl Sunday every year. We use this day to compile all the paperwork and information we need to start filing our taxing including credit card bills, online sales, and anything else we might need. We check to make sure we’ve received the proper forms from our clients and organize everything so it’s easy to enter into any tax software we might be using. I personally use TurboTax Home and Business software for my taxes these days. It’s easy and it walks you through everything one step at a time.

And because it’s Super Bowl Sunday, we prepare in advance to have snacks and treats throughout the day just like a regular party. It’s our way of making something that can be frustrating and tedious an event that we can look forward to. Well, as much as one can look forward to doing taxes.

Tax Filing Tip #3: Ask For Help

This one is equally important. If you are having difficulty in knowing where to begin, there is no dishonor in asking for help. Many times family, friends, or even colleagues can help you get this yearly chore done. If you offer them food and drink they might be even more willing to lend a hand.

Another option is to get a tax accountant. Using a tax accountant can make the process much less stressful. They have the knowledge and expertise to find deductions you might not know you’re eligible for. The cost for a tax accountant is usually only slightly higher purchasing tax software and doing it yourself. It’s worth the cost to get someone with tax expertise so don’t shy away from this option.

Conclusion

Whether you decide to do your taxes yourself or hire a tax accountant, filing your taxes doesn’t have to be difficult. Follow these tax filing tips to make your freelance tax filing a breeze.

For tips on using Excel for your finances, check out 3 Ways Excel Can Help You Track Your Freelance Income And Expenses

Veronica Buhl is a freelance social media manager, who has been a writer, editor, proofreader, summary writer, and transcriptionist for some of the top motivational and self-improvement speakers in the world. She has also helped numerous clients develop their websites, blogs, and social media presence in order to promote their businesses, non-profits, and projects. She is the author of the book, Making Your Business A Social Media Superstar, and is co-author of the book, The Massage Disadvantage. Her official website can be found at www.veronicabuhl.com