Welcome Life [Comma] Etc’s Freelance Tips series! Each Friday, I share something Freelance-y that I learn each week. Thanks for reading, and if you have any tips to share or questions to ask please leave them in the comments!
Additional disclaimer: I am sooooo not a CPA or any kind of official money person. I am a freelancer, and I outsource most of my accounting to a friend’s mom. BUT. I do have tips.
Quarterly taxes are excruciating. It’s so, so hard to work your butt off to make a paycheck, receive the whole payment, and then…. NOT get all of it!
But taxes are a part of life — especially when you freelance. You can’t take the risk that you’ll be audited and liable for tons of cash (or jail time), and paying your taxes are important for the health of the economy. Taxes will never be fun, but here are two strategies I’ve employed that make things a lot easier:
Set Up Income to Divide Semi-Automatically (Or At Least Easily)
When you’re a sole proprieter or freelancer, you’re responsible for taking taxes out of your “paycheck” each time you get paid. LLCs and partnerships work a little differently. For me, taxes are mostly a mental block . I can’t transfer $3K into my personal bank and then NOT consider all of it to be mine. So when the time comes to divvy it up, I get really frustrated to see the money go away.
The answer was to add my Tax Account to my PayPal withdrawal options. So now when there’s a $3K balance, I transfer $2K to my Personal Account and $1K to my Tax Account. It still hurts, but at least now it’s out of sight and (a little) out of mind!
Appreciate Your Country In Some Way
Taxes hurt partially because we don’t “see” the benefits — I feel like I’m working really hard for every dollar and that no one “deserves it” more than I do. But in reality, I am paying for things that make it possible for me to live my life — public schools (so other people’s kids get a fighting chance), roads (so I can drive to the movies and doctors appointments), and public servants (so….well, let’s just leave this one there).
To that end, I am planning a Quarterly Taxes Country-Lovin’ Blog Post in which I wax poetic on the many benefits I enjoy as a direct result of having grown up and lived in the United States. No matter your politics, find a way to appreciate the benefits your country DOES offer you for the price you pay — even if it’s frustratingly high. Focus less on the price tag, and more on the benefits you might not appreciate every day.
(Special note… 30 percent might seem crazy low depending on the country you live in, but keep in mind our family already shells out $500 per month for basic healthcare. Talk about an OW!).