Everybody’s got to do it. No matter in which country you base your business, you’re going to have to face the tax man eventually. As a freelancer, this can be quite overwhelming at times.
In the United States and most other countries, employment has its perks. One of those perks is that your taxes are calculated for you, and in some cases are automatically deducted from your pay. But how about for the self-employed? What’s the best professional tax software for freelancers?
Paying taxes isn’t fun, but it’s a necessary evil. Here are a few tips for keeping up with your finances, and on software that will make your life much easier when it’s time to pay taxes.
Freelancer Taxes: What You Need to Know
It’s not our place, and it’s also not in our area of expertise, to tell you how to file and pay your taxes. What we can do, however, is give you a few tips which will make your financial life so much easier.
A majority of our readers are in the United States, so we’ll focus mainly on those taxpayers. If you’re from another country, many of these tenets still apply, though, as they’re generally just good advice. Here’s what you can do before you start shopping for professional tax software.
First of all, keep close track of your receipts. It doesn’t really matter what it is. You need to keep a running total of your expenses and your income, and it all needs to be accompanied by a paper trail.
There are many items which can be written off on your taxes as a deduction. Business cards and other collateral can be deducted. Your laptop, if it’s primarily used for work, can as well. Your internet service may be tax deductible. And even your office space, if it’s a dedicated work environment, can be counted.
Keep track of everything, and try your best to keep it organized. In a pinch, receipts in a shoebox will do, but it’s best to file your papers by month and by category. You’ll find it much easier to file your taxes, or to hand over your paperwork to an accountant.
Do Freelancers Need Accountants?
Now that we’ve mentioned accountants, we’ve probably got you curious. Do you need to hire someone to do your taxes for you? Will it be easier?
The answers are no and yes. You don’t need to hire someone to do your taxes for you. But it most certainly will make it easier. If you’ve never filed taxes before, an accountant is a good idea. And if this is your first year filing as a freelancer, that’s a good reason to hire someone, too.
Your accountant knows the tax law in and out. She can help you find loopholes, but can also make sure that you pay everything you owe. The cost of an accountant’s services can be much cheaper than that tax bill you risk getting if you file incorrectly.
If you’re not sure whether you need an accountant, you can always try to file on your own first. If you run into any difficulty, it may be best to seek proessional help. But our suggestion is that you give it a shot first. Many freelancers don’t need help at all – professional tax software is the next best thing to having an accountant.
Choosing Professional Tax Software
There are just as many software programs as there are tax preparation offices. You can choose TurboTax, H&R Block, Liberty Tax, or even Jackson Hewitt to file your taxes.
Many of these professional tax software options have a distinct advantage: brick and mortar offices. H&R Block, for example, has locations across the country. If you run into trouble, you can always pop into a local office and hire a preparer.
But there are other programs which have different benefits. Using a software program like QuickBooks will help you manage your finances throughout the year, then filing your taxes is a breeze.
We recommend playing around with a few of these professional tax software options. Choose the one that’s the most user friendly for you. Most programs are quite intuitive, and even import information from your bank account and from last year’s taxes. Here are a few ot the options available to you.
TaxAct is a big name in tax preparation. For taxpayers who work in a business setting, the software offers a free filing program. For the rest of us, it’s quite affordable. Whether your business is an LLC, S-Corp, a C-Corp or you file as a sole proprietor, TaxAct can walk you through filing your self-employment taxes.
We mentioned Jackson Hewitt earlier, and it’s another good professional tax software option. Like others, Jackson Hewitt has physical locations just in case you get stuck. It’s one of the best programs for importing last year’s tax return. The Jackson Hewitt program will parse that info into this year’s return, making the process that much quicker.
We love QuickBooks. It’s a tried and true software for business expense and income reporting, and it’s so easy to transfer your annual statements into a tax return. You can invoice clients from the program, categorize your expenses in a few clicks, and even import your bank statement to the software.
QuickBooks has tax filing tips right on the website. But you can also find a list of QuickBooks certified tax preparers in your area. We can’t express enough how simple it is to import your monthly statements into your tax return. Click, click, DONE!!
TurboTax is one of the pricier professional tax software programs, but one of the most reliable. You’ll pay around $115 for the software and to file, but most of your information can be input by simply entering figures into a questionnaire.
TurboTax has been around for quite some time, and they’re well-known for their audit protection of all kinds (relating to self-employment, which means no ZPIC audits or other commercial audits). If you’re contacted by the IRS with any questions concerning your tax return, you can contact TurboTax. Know other freelancers? You can refer your friends to the TurboTax program and you’ll get a $10 Amazon gift card.