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Tips On Tax When You’re Self-Employed

Being self-employed can have its ups and downs. As much as you have the freedom to work as and when you want, you don’t get the same benefits as those fully employed do. Things like sick pay and holiday pay don’t exist, so saving money where and when you can is important for those months where money might be sparse. Here are some tips on tax when you’re self-employed.

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Keep Your Receipts Safe

Your receipts are something you’ll need to rely on when it comes to your taxes and these need to be in excellent condition. This is because if you don’t, then they’re not going to be readable. With receipts, the best way to look after them is to scan them digitally and to keep them in folders. That way you get them safe and secure immediately and then physical copies can be kept in a folder, just in case anything happened to that digital file where it became comprised in any way. Keeping these receipts safe is going to make your life easier when it comes to doing the tax return or your accountant’s if you rely on someone else to handle your taxes. Also, it might also be worth checking up on what’s taxable so that you know what is and what isn’t. This might be something that changes every so often, so it’s important that it is monitored just in case.

Start Tracking Your Income

Being self-employed comes with its challenges because every month is often different and varies in the amount of money you make. Some months can be really profitable, and then others might be very sparse. This can cause a lot of stress and unwanted anxiety, so to help curb this, you might want to start tracking your income. See what is needed in terms of the money that’s coming in and what is taken out each month. That way, you can prepare to save extra in those months where you do well for any bigger expenditures that might be needed. Tracking your income will help you feel more in control, and it will also help you figure out those months where you may need to pay back taxes and to help prepare for it a little easier.

Put Aside An Amount For Tax

Whenever you earn money, unlike being fully-employed, you don’t get automatically taxed. This can be dangerous as you could easily spend this extra money that really belongs to the taxman. The last thing you want is to get to your tax return and receive a bill that you are going to struggle to pay or might not be able to because you haven’t set aside that money that’s needed. This might then lead to more serious problems where a tax fraud attorney is involved, or you may end up having to take out loans to pay this tax back.

Speak To A Professional If You’re Confused

Handling tax isn’t for everyone, and so in some cases, it might be handy to speak to a professional about it. A financial advisor or hiring an accountant that specializes in tax returns can be good to get an understanding of how it all works. You might decide to learn how to do it all through them and then process the returns yourself or you can hand it all over to them to sort out at the end of each financial year or whenever the tax is due. When speaking to a professional, you also get clarification that you’re paying the right amount and that you’re not getting stung by the taxman.

Self-employment isn’t for everyone but for those who do have it as their career, there’s a lot more than can be gained from being your own boss. The money side will always be slightly unstable, so make sure you’re saving money on the side and always save extra on a good month. Doing this will hopefully put your mind at ease and that way, you can fully enjoy the experience of working on your own schedule, whilst doing something you really love and are passionate about. Take these tips for handling your taxes successfully and take advantage of all the resources out there.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

By Sheena Jordan
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