{"id":27016,"date":"2022-07-24T01:47:16","date_gmt":"2022-07-24T01:47:16","guid":{"rendered":"https:\/\/c1mdevsite.com\/braunability.com\/five-mistakes-to-avoid-if-you-are-self-employed\/"},"modified":"2022-07-24T01:47:16","modified_gmt":"2022-07-24T01:47:16","slug":"five-mistakes-to-avoid-if-you-are-self-employed","status":"publish","type":"post","link":"https:\/\/c1mdevsite.com\/mdctraining.ca\/five-mistakes-to-avoid-if-you-are-self-employed\/","title":{"rendered":"Five Mistakes to Avoid If You Are Self-Employed\u202f"},"content":{"rendered":"
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As the \u201cGreat Resignation\u201d continues, more and more Americans are finding themselves in a new work category. That is the one of being self-employed. With this new work approach comes new freedom and flexibility. Being your own boss means working on projects that you choose, setting your own work schedule, and managing your own affairs. Part of this newfound business freedom means new responsibilities, too. One primary responsibility of the self-employed is managing and filing taxes.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Taxes are relatively standard when you work in a traditional job as an employee. With common forms and deductions, most tax handling is automated and done for you. Tax planning and compliance as a business owner can be different from filing as an employee. It can be confusing and complicated and many new self-employed<\/a> workers are caught by surprise.\u00a0<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

Tax Preparation for Self-Employed\u00a0<\/span><\/b>\u00a0<\/span><\/h2>\n

\u00a0<\/span>Waters Hardy is here for all of your tax preparation needs. Whether you are transitioning to self-employment or are an experienced self-employed person looking for assistance with your taxes, we can help. We are an experienced and reliable resource if you need some advice, a consultation, or a complete turnover of all tax preparation services. Our tax experts<\/a> understand the importance of proper planning and tax filing.\u00a0 Let\u2019s learn more information about common tax mistakes self-employed people make so you know exactly what to avoid.\u00a0<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

5 Tax Mistakes to Avoid While Self-Employed<\/span><\/b>\u00a0<\/span><\/h2>\n

1. Using Personal Accounts for Business<\/span><\/b>\u00a0<\/span><\/h3>\n

\u00a0<\/span>Don\u2019t use your personal accounts for business expenses. Technically, you could go through your accounts and separate business expenses, but the chances of this are minimal. It\u2019s much easier to use different accounts from the beginning.<\/span>\u00a0<\/span><\/p>\n

Use Checks or Credit Cards<\/span><\/b>\u00a0<\/span><\/p>\n

Paying for business expenses with cash is not tax friendly. Using checks or credit cards makes record keeping a breeze. With the growing popularity of digital tax filing, online records and statements are the quick and sure way to organize all eligible deductions.<\/span>\u00a0<\/span><\/p>\n

2. Neglecting to Keep Financial Records <\/span><\/b>\u00a0<\/span><\/h3>\n

\u00a0<\/span>This requires a lot of time and effort, but keeping accurate records is critical to proper tax planning. The IRS can ask for records, including receipts for up to 6 years. Don\u2019t wait until tax time to try to pull your receipts together. Keep up with records throughout the year with a tried-and-true leger or journal, computer software, spreadsheets, phone apps, etc.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Keep Track of Income and Expenses<\/span><\/b>\u00a0<\/span><\/p>\n

\u00a0<\/span>The IRS requires you to keep proof of both income and expenses. Every transaction needs to be recorded. The best time to do this is in real-time. That is when you can most accurately record the type of transaction, amount of income or expense, and eligibility for deduction.<\/span>\u00a0<\/span><\/p>\n

3. Not Putting Money Aside for Taxes<\/span><\/b>\u00a0<\/span><\/h3>\n

\u00a0<\/span>As a self-employed professional, it\u2019s nice to see your income rolling in without the standard tax deductions taken right off the top of your pay. It takes some discipline to understand that you will still have to pay taxes eventually and plan accordingly. The best way to do this is by deducting money by yourself and setting it aside for the future. This will help you avoid anxiety and stress when it\u2019s time to meet your income tax obligations.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Make Estimated Payments<\/span><\/b>\u00a0<\/span><\/p>\n

\u00a0<\/span>If you\u2019re self-employed and expect to owe at least $1,000 in taxes for the year, then you\u2019re required to pay estimated taxes, also known as quarterly taxes. These are prepayments toward your final tax bill.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Estimated quarterly tax payments are due:<\/span><\/b>\u00a0<\/span><\/p>\n