Ah, self-employment. It's all fun and games until tax season hits and you have no idea what you're supposed to do (or should've been doing all of 2021).
To guide us weary workers, I chatted with a couple tax experts who shared everything self-employed workers should be doing (or start doing now to make next year's taxes a whole lot easier).
Separate your work expenses from your personal expenses. (Hint: Opening a work-specific credit card and bank account helps a lot.)
Track all your work expenses using an online accounting software.
And don't forget to keep your receipts!
You should set aside a portion of every paycheck — around 30% — to cover what you'll owe come tax season.
And instead of paying taxes in one chunk in April, you'll need to pay your taxes quarterly.
Since you'll be paying your quarterly taxes before tax season, you'll have to figure out how much you'll owe. This is how to figure it out.
Keep in mind that if you underpay your quarterly taxes (or don't pay them at all), you may be penalized.
There are a few things many self-employed people forget to deduct. Healthcare payments are a big one.
And don't forget to deduct things like credit card interest, your home office, training and education, and more.
Plus, this year, you can deduct what you paid for food and beverage at restaurants in full.
If you're looking to lower your taxable income this year, you can max out your retirement contribution.
And if all of this feels scary and overwhelming, don't worry. There are plenty of tax experts who specialize in filing for self-employed people.