The following article is the second article in a series of three about making a sustainable living as an independent contractor. In this article, The Daily Deduction discusses tax-smart ways to manage your business.
Independent workers may be able to deduct business expenses like their home office or necessary upgrades to computer hardware and software to perform their work.
Many independent contractors don’t have taxes withheld from the income collected from clients or customers. Contractors could be in for a nasty surprise come tax time if there isn’t enough money set aside to cover their tax liability. One way to avoid this problem is to set aside a percentage of every paycheck in a separate account and pay quarterly estimated taxes to the IRS.
It’s important to talk with a tax advisor regularly so that you can identify some tax planning techniques that may help you with your business.