Freelancers & Self-employed: What are some common tax issues

Our CPA firm has worked with a lot of self-employed individuals in the hospitality industry, night clubs, nightlife restaurants, bars, including promoters, DJ’s, and people in music. A lot of people in these industries are freelancers/self-employed, and have a hard time preparing for taxes and other financial issues.

For those of you who are freelancers & self-employed, here are some common tips:

put money aside for taxes and/or make quarterly tax payments
keep your receipts, invoices, paperwork in some kind of organized fashion
keep business banking & finances separate from personal
home-office deductions are sometimes red-flagged by IRS:
so prove past (home-office) residences through photos, etc.
keep other receipts & proof you need to keep in case of an audit
keep proof of self-employed health insurance to prove deductions

Taxes aren’t withheld from your paychecks, so you need to be disciplined in terms of putting money aside for taxes, whether you’re going to pay quarterly or at the end of the year. Making quarterly tax payments usually saves penalties and interest at the end of the year. You also have to keep track of your business-related deductions, whether you use Quickbooks or a spreadsheet. Keep all your invoices and paperwork.

A lot of people think that just credit card statements are enough. From the IRS. audit experience that we have, a lot of auditors won’t just accept credit card statements. It is important to keep the actual receipts, whether it’s a meal or a taxi, or just another type of expense that comes up when developing your business.

Keep your business expenses separate from your personal expenses.
If you’re more organized, we don’t mind giving you a better deal on your fee. We only want to charge our clients for what they need…We’re very straightforward that way. So if you only need a few hours of work or so much tax prep, then we can give you a rate based on that.

So how do you keep track of your finances or taxes right now? Do you use a spreadsheet or have you given Quickbooks a shot? Either way we are here to assist in any way possible. Ask us your questions; we offer a free consultation – at any point throughout the year.