5 Basic Tax Tips for Freelancers and the Self-Employed

When starting a home-based business or undertaking any sort of self-employment, most people get intimidated at the prospect of tracking, filing and ultimately being responsible for their own taxes. While it’s true that you’ll have to manage and pay taxes on your own, there’s no reason to feel intimidated; you’ll be able to make the transition from employee to self-employed with no problems if you arm yourself with some knowledge.

Here are some basic tips for managing your taxes:

1. Save every receipt. Nothing is more valuable to the self-employed than a receipt for a business expense. Make sure you keep receipts of any purchases related to your business. This includes office furniture and supplies, computer hardware and software, phone and internet bills. Also, be sure to save receipts for any expenses that you’ve had to incur due to self-employment. This includes medical and dental bills, childcare bills and travel expenses(airfare, accommodation, meals). All of these things can be deducted if you can prove that they’re business expenses.
2. Keep detailed records. Copy and store all of your receipts safely and create detailed spreadsheets that track all of your expenses and revenues for the month. File billing invoices properly. Leave no stone unturned, the more meticulous you are, the less likely you’ll make a mistake.
3. Deduct your office space. In addition to deducting your business expenses, you may be eligible to deduct a portion of your utilities, rent, homeowners insurance, etc. Measure the space of your home office and divide it against the entire square footage of your home to find out how big of a percentage you may be eligible for.
4. Set up a retirement plan. By setting up a registered retirement plan, you’ll not only be investing in your future, but you’ll also defer taxable income and lower your tax bracket.
5. Get help. Dealing with taxes can be complex and frustrating for a lot of people, especially for the newly self-employed. In these cases, the best thing you can do is get in touch with an accountant or tax expert that has experience filing taxes for the self-employed. They’ll be able to help you maximize deductions, set aside tax money and file your taxes correctly

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