Free Financial Today

If you are self-employed, you probably already know that its a fantastic way to get ahead financially. You also have the freedom to be your own boss and make decisions regarding your business operations, clients and work schedule. However, you also probably know that filing taxes as a self-employed individual is much more difficult. Whether you are a freelance writer, consultant or independent contractor, there are a few things that you should be aware of in order to avoid setting off red flags to the Internal Revenue Service (IRS).

You should first know you will need to organize all of your freelance and independent income from other types. Make sure you report all income, especially on Form 1990s since these are given to the IRS. Track all business expenses. This means any legal expenses, advertising, repairs, supplies or anything else that you need to operate your business or provide your services.

For instance, if you have a website developed or business cards printed to promote what you do, keep record of those work orders and invoices. Next, if you work out of your home, make sure you fill out Form 8829 in order to calculate how much of your home is used for business purposes.

Set aside money throughout the year to pay money on your personal income from self-employment. You will typically be paying more than if you were employed through a company because an employer will pay part of your Social Security and Medicare taxes. Unfortunately, as a self-employed individual, you will be left with the burden of paying both sides of these taxes.

According to the IRS, your service or business should make a profit three out of every five years of operation in order to qualify for tax write-offs. If not, you will be required to prove that your business is viable. If you find yourself facing a tax audit or other problem, find a profession who understands the complexities of self-employment taxes.

If you are facing an IRS audit or have other tax problems, contact the experts at Guardian Tax Resolutions today by visiting GuardianTaxResolutions.com for a free consultation and quote.