#FREELANCE BOOKKEEPING BLOG HOW TO#

Start tracking your business income, including your sales, revenue, expenses, etc. To avoid getting slapped with an outrageous tax bill you werenвЂ™t expecting, get organized. For those companies making above approximately $70,000, check with an accountant sooner rather than later about the benefits of incorporating your business. To do that, itвЂ™s important to set up a business bank account and register your business.Дepending on the type of business and your income, you can register for a GST/HST number as a sole proprietor. One of my earliest self-employment lessons was to separate my personal and business finances. With a little organization, freelancers, contractors, and self-employed workers can prevent major tax issues and possibly even minimize their tax bill with a few key deductions. I now go to great lengths to set aside more than enough to pay my tax bill each year, maximize the number of deductions I can claim, and file my taxes early.ДЄnd lucky for you, dear readers, itвЂ™s possible to avoid my atrocious errors in judgement.

#FREELANCE BOOKKEEPING BLOG HOW TO#

How to learn from my freelance tax mistakes But I learned a valuable lesson: a little foresight can save me serious stress (and debt). Hindsight may be 20/20, but even now IвЂ™m not proud of my lack of planning. I didnвЂ™t research or plan ahead because I was too busy spending my extra money on frivolous things I didnвЂ™t need (mani-pedis for everyone!). I didnвЂ™t want to put the balance on a credit card (I at least knew better than that), so I went to my bank and took out a personal loan to pay off the bill.Д«asically, my financial mess was entirely my fault. And because I didnвЂ™t have my financial life together back then, I didnвЂ™t have the cash I needed to pay my tax bill. I grossly underestimated how much cash I needed to set aside, and I got dinged for it. Underestimating the cost of doing business So, when I went to an accountant to file my income taxes in 2013 and discovered I owed more than twice that much, I walked away with a nasty case of sticker shock. federal and provincial taxes) on my additional income. I was willfully ignorant about how much I realistically needed to set aside to make regular tax payments (i.e.

And I did just that - I got my HST number and set aside enough cash to hand over to the tax man.Д«ut I did minimal research on any other aspect of business taxes. I registered my freelance business for a GST/HST number because I knew IвЂ™d need to collect additional HST on top of my payments from my client. And with that wealth of extra work, I was happily making bank. On top of my regular 9-to-5 gig, I was freelancing as a writer and editor on the evenings and weekends. How I landed in tax trouble (and debt) Ignorance of business taxesДЄ few years back, I landed a lucrative side hustle. HereвЂ™s how my serious lack of planning landed me in tax trouble (and in debt) and how you can avoid the same issues. I dug my own hole that was $6,000 deep, and it was all thanks to my refusal to brush up on my tax obligations as a freelance business owner.Д«ut you donвЂ™t have to make the same mistakes I did when it comes to your own business taxes. And that embarrassing blunder landed me in a financial predicament all of my own making. When I first started out, I was ignorant of filing and remitting tax payments for my side biz. While being your own boss certainly has its benefits, it also comes with unique responsibilitiesвЂ¦like filing your own business taxes. And while I run my business part time (I still hold down a full-time job as well), I know IвЂ™m one of a fast-growing movement. IвЂ™m a small business owner - IвЂ™ve hustled as the sole proprietor of a writing and editing service for the last few years.

While 2 months may seem like a long time beforeВ the filing deadline, IвЂ™ve got a dirty little secret: I learned an expensive lesson about business taxes - and I learned my lesson the hard way. With tax season arriving, it's high time to startВ gathering receipts and all the other documents to file your personal and business taxes for the previous year.

Freelance bookkeeping blog