When you work as an independent contractor, there are many things that you will have to handle on your own. Knowing what to expect when it comes to filing taxes as an independent contractor can be very difficult for many entrepreneurs. If you plan to go into business for yourself as an independent contractor, use the guide below to learn how to properly prepare for filing taxes for the first time.
Keep Receipts for Everything
The first thing you need to do is to keep receipts for everything that you buy for the business. Gas, portions of your electric bill (if you work from home), and even business lunches can be deducted from your taxes when you go to file. You need to have proof for all of the money that you claim to have spent in case the IRS decides to audit you to get proof for the deductions you file.
Save Money All Year Long
When you receive payments from clients, there will be no taxes taken out. You need to make sure that you save a portion of each check all year long so that you have enough money saved up to be able to pay the taxes quickly and easily. Taking the time to save a little bit over time makes paying your taxes less of a financial burden when tax time arrives.
Hire a Professional Tax Preparer
When you go to file your taxes, hire a professional to handle the paperwork for you. The preparer will have experience with filing taxes as an independent contractor and may be able to let you know about possible deductions that you do not even realize are available to you. You will need to supply the preparer with proof of all payments that you received and donations you made throughout the year to ensure that they can give you as accurate of a filing as possible.
It is important to file your taxes on a yearly basis to ensure that you do not get into trouble for tax evasion by the IRS. After the first year of being in business, filing your taxes will be easier because you will know what to expect and how to get as many deductions as you possibly can each year. If you have any questions about filing taxes as an independent contractor, you can also meet with a tax preparer like those found at Wiggins, Smit, Burby, Reineke, & Company P.A. before you even start your business to learn a few ways to make the tax preparation process as easy as it can possibly be.