Tax is your contribution to the states’ revenue that is required by law. In taxation, if you are the sole owner of a business, in partnership with others, or just doing business either part-time or full-time, your status is a self-employed individual or an independent contractor.
Tax preparations for independent contractors – a service provided by firms such as Equinox Business Solutions – are not an easy task, but you can ask for help and guidance from the professionals.
If you do decide that you need help, consider these things first.
Manage your records
It is important for you to keep a record of your business expenses such as receipts for possible deductions of your tax as self-employed. Any proof of your daily expenses related to your work such as materials, services, travel expenses (if applicable) like gas or fare, food and accommodation costs.
Do it in an organized way for easy access whenever you need them.
Disclose all your earnings
The Internal Revenue Service or IRS has its own way of tracking your income. So, to avoid the hassle, make it a point to disclose your earnings for the tax year properly. As a self-employed individual, each year, you will be getting a form called 1099-MISC that states your income in all your works done.
Pay your taxes quarterly
Being an independent contractor, you are required to pay your taxes quarterly. For your earnings from January 1- March 30, tax is due on April 15; earnings from April 1 – June 30, tax is due on July 15; earnings from July 1 – September 30, tax is due on October 15; and earnings from October 1 – December 30, tax is due on January 15 of the following year.
The payable taxes includes the Estimated Tax (your income tax) and your Self-Employment or SE Tax (refers to Medicare and Social Security) which is payable once a year.
Pay your taxes on time to avoid unnecessary liabilities and penalties. If needed, get advice only from tax experts.