Taxation for Freelancers
As a freelancer there are three possibly options through which you can be charged for tax. This could be any of the following listed ways which are as follows.
As a Sole proprietor: this is the simplest,easiest and most efficient form of taxation for freelancers. This is the method of taxation that is usually available for most freelancers available online.
As a freelancer, you can be charged as a sole proprietor for the following reasons: if you operate under your personal name without a limited liability company(LLC), if you operate under a single owner limited liability company and you did not file anything with the IRS so as to put in for another different tax.
Tax planning for Solo Proprietors
Here, your income and expenses as a freelancer will be reported personally using IRS form schedule C.
S-corp taxation: a freelancer will be taxed understand this type of tax classification only if you operate under a limited liability company and you put in for a form with the IRS. This type of taxation is the choice of the freelancer to register under such type of tax payment programme.
Here, you will be paid a reasonable amount as salary since the S-corp will file its own tax return. This type of taxation also helps freelancers to reduce their tax liability. You should seek help from an accountant so as to save yourself some cash.
C-corp taxation: this is the least form of taxation used by freelancers and it is quite stressful. A freelancer can only be taxed with this if: the freelancer has formed a limited liability company and has filed that he or she wants to be taxed as a C-corp or the freelancer formed a C-corp and never filed for the S-corp.
Here, the corporation will pay taxes on income and after you have distributed income to yourself, you are obliging to pay another tax, making tax payment twice.
Pay your Taxes
To pay for your taxes a freelancer, you have to calculate your income and expenses and you attach a C-schedule form to it. It should be noted that no freelancer should try to avoid the payment of tax because this may lead to payment of a lump sum which can actually affect and take up your total income as at the end of the year. If you really don’t know how to make payments, you can get the help of an accountant that is into freelancing.
A freelancer is known as a person who works for people but not on a long-term deal. The freelance business is a one-man thing and it involves working without staying under someone. The freelance job just like any other job is now widely known and they also do some things just like every other employee under an employer. As a freelancer you decide when and how to pay your tax because there will be no one or a boss to remove it before paying you.
Taxes for freelancers is usually paid quarterly and failure to doso can lead to you paying extra charges on the tax to be paid.