Do you understand how to Pay Taxes as a Self-employed Professional?
If you are self-employed you will be in charge of your day to day job, as well as administrative tasks that include keeping track of and paying taxes. Remember, this is a big part of working for yourself. There is no longer a human resources department that will take care of taxes for you by deducting the proper amount from each paycheck. Instead, you need to do this on your own. Are you scared yet? Don’t be! This is something that tens of thousands of Americans do each year with ease and success.
The most important thing to understand is that you will want to pay quarterly taxes. In other words, you will remit payment for both federal and state taxes on a quarterly basis or four times per year. To get setup, you will want to make an appointment with a certified public accountant or other tax professional. They will be able to explain this process to you, while also telling you how much you should pay in taxes based on the income that you are expecting.
One thing to remember is that self-employed professionals usually do not have a set income. For instance, you may be paying taxes each quarter based on an income of $5k. But if you begin to earn $7k/month, you need to adjust the amount that you pay as to avoid issues at the end of the year.
When it comes time to file your final return, this is when the help of a professional will really come in handy. They will be able to tell you if you paid enough throughout the year, while also working with you to lower your liability through deductions, etc.
The bottom line is simple: self-employed professionals need to keep close track of anything that has to do with taxes. This includes everything from paying on time each quarter to tracking deductions.
