Being a freelancer gives you the control to decide when to work and the clients to choose. Before you become a freelancer, it is wise you learn more about the taxes you will be paying. You need to know that taxation works differently between the freelancers and the employed people. Hence, you need to look for a genuine website that will guide you know the taxation guidelines for freelancers. The goal is to ensure that you adhere to the taxation laws set by the IRS for self-employed people. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
For the employees, the employers are responsible for handling their income taxes. The money you get when you are employed is less different from voluntary and mandatory deductions. When you receive your paystub as an employee, it will show the various deductions that the employer has made. The amount you pay in taxes as an employee will depend on your income and where you work. Some people get tax relief to reduce the taxation burden due to various issues such as having many dependents. To know more about the taxation forms to use when you are employed, you need to find the best site to use. You should also get more information on your State taxation.
If you decide to become a freelancer, you need to know that you will be managing all things relating to the taxes you pay. The money you receive from clients does not have any withholding taxes. It is therefore up to you to keep a good record of all the incomes for a given period to decide the total amount to pay in taxes. It may be challenging for new freelancers to handle the complex taxation process. It is wise you look for resources that will guide you on how to handle this task. You may need to hire an accountant to help you calculate the taxes when you are a freelancer. Other prefer to invest in an accounting and taxation software, where they input their incomes and the software calculate the taxation. It is smart you examine these two alternatives, see the cost of each to identify the one to employ. The other thing is to learn more about the tax write-offs you are eligible to get as a freelancer.
Therefore, if you are considering venturing into the freelancing field, you should keep track of all the money you get from clients. Consider using spreadsheets to input your income after every work, record the money you earn and the expenses you incur.