One of the biggest headaches facing anyone that chooses to be an independent contractor is dealing with their taxes. Because you do not work for any company but your own, you are responsible for making sure everything is paid on time and, in turn, things could get a little hectic as April 15th draws near. If you keep these simple things in mind, however, you will be able to get your taxes taken care of with little to no hassle.
File every quarter of the year.
- This is a commonly known requirement when it comes to being an independent contractor. Many self employed individuals and businesses have to pay every three months of the calendar year to avoid penalties. Whether you are required to or not, it is smart to do this not only to avoid fees but as a way to stay organized and on top of your taxes.
Make sure you deduct enough from your paycheck.
- This is something that many independent contracts do not anticipate when they start taking out taxes from their paycheck. It is a general rule of thumb to take out 30% of your check for taxes and the like so that you are covered no matter how much your taxes comes out to. This will keep you safe once tax time rolls around.
If all else fails, file for an extension.
- This should be a last ditch effort, but filing for a tax extension that elapses in October is a great way to buy time so you can save the money that you did not have in April. This should not be done all the time but is a good way to get a little extra help when your back is to the wall.
If you are interested in getting more tax help, please contact us.