How Do I Prepare for Tax Season as a Freelancer?

As a new freelancer, does the thought of preparing for tax season scare you?

It’s okay if it does, there are many seasoned business owners who start sweating bullets at the thought of filing their taxes. That’s because they’re not prepared.

How Do I Prepare for Tax Season as a Freelancer?

As a new freelancer, does the thought of preparing for tax season scare you?

Filing your taxes is an important (make that critical) part of being an entrepreneur.

It’s also something you should be thinking about year round, not just in March or April.

There are five simple ways you can prepare for tax season as a freelancer that will remove a lot of the stress associated with the word “taxes”.

1. Recognize You Are a Business Owner

All too often, freelancers seem to think the label “freelance” is somehow different from being a business owner, but it’s not.

The first step in feeling more comfortable with the certainty of taxes, is realizing that you are a business owner.

It’s time for a mindset shift. When it comes to being self-employed, you either are or you aren’t.

Even if you are just “testing out” freelancing for a couple of months, you’re still in business for yourself during that time.

So, congratulations! Welcome to the world of entrepreneurship!

As a freelancer, you are completely responsible for finding your own work which is no different from any other self-employed individual.

This is a wonderful thing, but it comes with responsibilities like paperwork and paying taxes.

Being a business owner means taking responsibility for the money flowing in and out of your business and the best way to do this is by being organized.

2. Organize Your Documents

Whether you prefer to keep track of things digitally or on paper, it’s important to keep all your documents related to your freelance business.

In most countries, it’s up to the taxpayer to prove to the tax authority that they are eligible to claim expenses against their freelance income.

The only way to do this is by showing a receipt.

One of the most common mistakes business owners make is throwing out their receipts, thinking they can use their bank or credit card statements instead.

The problem with statements is they don’t show the details of what was purchased, so there is no way of proving it was a legitimate business expense.

A great way to keep your income and expenses organized is with an accounting app.

Wave is a great free app with lots of tutorials available on YouTube. Xero and QuickBooks Online are very user friendly paid options.

All three of these accounting apps also allow you to give your accountant access to the program which really streamlines things during tax season.

3. Get Professional Help

Don’t take this the wrong way, but you need professional help! Unless you know the tax laws for your country inside and out, you definitely should not be preparing your own taxes.

Tax laws can change at the drop of the hat which is why it’s super important to hire someone who knows the current laws rather than trying to DIY your taxes.

If you’re not sure where to look when it comes to hiring an accountant or tax professional, the Internet and friends who own businesses are great places to start, but you want to make sure you do your research before hiring someone.

Consider interviewing at least three people before deciding who you want to work with.

You can do this over the phone if you don’t have a lot of time but usually a face-to-face meeting will give you a much better feel for what your working relationship will be like.

Ideally, you want to end up with someone who will be a trusted advisor for the life of your writing business.

Here are a few essential things to consider when hiring a tax professional for your freelance writing business:

  • Are they up to date on any tax changes?
  • Do they have experience working with freelancers?
  • Are they authorized to file taxes in your jurisdiction?
  • Are they familiar with the accounting app or software you plan to use?

Don’t feel worried or uncomfortable about asking these questions and any others you might have. A true professional will understand that you are doing your research to make sure you get the best help possible.

4. Be Prepared When Meeting with Your Tax Professional

Now that you’ve found yourself a trusted tax professional, there are a few things you can do to ensure you feel comfortable meeting with them.

Before your meeting, take some time to think about all the things you’d like to discuss.

Make some notes you can refer to so you don’t forget anything. It’s a great idea to ask your accountant ahead of time about the documents they will need in order to prepare your taxes.

Many accountants will have business and personal tax checklists on their websites that you can access any time.

If you don’t see this then definitely ask about it, because it can save you both a lot of time.

In addition to your income and expenses, your accountant will need details about your business such as the official name you operate under and the date you started.

You will also need to provide personal information such as your address, birth date, and tax ID (such as social security or social insurance number).

5. Start Now!

It’s never too soon to start getting things organized for tax season. Being organized takes a lot of the stress out of filing your taxes.

Your accountant or tax professional will appreciate it too.

Accountants tend to get really swamped the closer it gets to the tax filing deadline, so the sooner you can hire someone and get your documents into their office, the better.

They will be more likely to take you on as a client the farther away it is from the filing deadline. Ideally, as your business grows, you’ll want to be in touch with your accountant throughout the year, not just at tax season, so they can help you plan and prepare for paying your taxes.

Taking appropriate measures throughout the year can help you avoid a large tax bill in April.

So, take a deep breath, start organizing your documents, and make some appointments to meet with local tax professionals now so you’ll breeze through tax season like a pro.

Still feeling a little anxious? What stresses you out the most about tax season?

Michelle Cornish is a former CPA, ghostwriter for hire, and author of Keep More Money, a guide to finding the perfect accountant. She helps CPAs, business and life coaches connect with their ideal clients through content marketing. When she’s not writing, Michelle enjoys spending time with her family in beautiful BC, Canada.

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