Do you know how to make money online? Everyone it seems is going online and looking for a get-rich-quick-scheme and for some they are successful; however, many others are not. There are millions of great freelancers that use the web as their source of income. For some, they outsource their talents and skills to people who require help and for others, they create a business online and have a steady stream of income; the possibilities are endless. However, with freelancing, it’s a bit different in terms of taxes, compared to those with a ‘traditional’ 9-to-5 job. So, what might you need to know about taxes when you become a freelancer?
Make Sure Your Records Tally with Your 1099
Freelancers are often classed as independent contractors (depending on the type of work you’re doing) and that means companies or employers will hand you a 1099. However, what you might not be aware of is that the employer sends a copy of this to the government, the IRS, and as such, you cannot afford to get the numbers wrong. For example, in your 1099 it’s claimed you earned $10,876 from that employer, but you record you make $8,986, that’s a red flag to the IRS and it’s something they’ll look into. Instead, you have to go over every record carefully and ensure your personal records tally up with your 1099 and any other forms you get. When it comes to money earning apps and earning that way, things may be slightly different, but when working with a company, you have to ensure everything adds up properly.
Have Separate Accounts (And Keep Good Records)
You want to know how to make money online, great, but, when it comes to finance you have to be extra careful. Sometimes, freelancing is a second stream of income and they have a full or part-time job elsewhere, but that can make it very difficult to understand your taxes. For example, you earn fifty thousand dollars a year with your full-time job and you make roughly six thousand from freelancing, but all finances go into one account, can you be sure where you’re incomes coming from? Sometimes, it’s easier to have separate accounts for freelancing, especially if this is a business. You also need to ensure good records are kept when it comes to your taxes too.
Use a Tax Professional
Sometimes, it’s tough to understand the ins and outs of tax, and when you’re a freelancer things get even worse. As an independent contractor you’re the one responsible for getting your taxes right, but if you’re unsure of the process, you need professional help. Why is that? Taxes need to be right and if you have essentially a business you need to ensure the right taxes are paid and the right amounts also. It’s maybe slightly different if you’re a casual worker and you work once a month, then maybe taxes won’t be as complicated, but when you’re working for several companies or have a company of your own, things are different. If in doubt, call in a professional to help with your work at home jobs and taxes.
Take Taxes Seriously
A lot of newcomers don’t take taxes (or their finances) seriously enough when they first become a freelancer and it’s understandable. Some don’t think this is going to be a full-time gig for them, while others believe they can earn a little extra on the side. However, you can’t cheat taxes because you can get into some serious trouble. That’s why you need to be clued up on the things you may need to do when you become a freelancer. Whether money earning apps is how you make your money or creating a small e-commerce business, taxes must be reported, so don’t neglect them. Check out this site: https://www.investopedia.com/articles/tax/09/self-employed-tax-deductions.asp