Like many people, you may have decided to become a freelancer in recent years. This is a move that many professionals are making due to money increases and the ability to pick and choose hours as well as contracts. This option of work does offer a vast array of benefits, but there are some downsides. One of those downsides is trying to prepare your own taxes when you may not be used to the process. Here are a few of the freelancer services that a tax preparation service can offer.
1. Form Determination
As a freelancer, you will have several forms that you have to keep up with for tax preparation services. These include but are not limited to a W-4 rather than a W-2 form and 1099 forms. You may also have additional forms covering deductions, tax liability, health coverage, and charity contributions. Your tax preparation service will be able to sit down with you and discuss what forms they need based on your specific business. They can also work through these forms with you if necessary.
2. Proper Deductions
Determining if expenses are work-related for deduction purposes can be tricky. For example, you may not know if the business dinner you had with a colleague several days ago was actually a business dinner or if it was simply dinner with a business colleague. Other issues that may pertain to your deductions are equipment that has been purchased within the year, supplies, and services requested throughout the year. Your tax preparation service will be able to determine from your receipts and from questions they ask you which expenses are actually business-related for deduction purposes.
3. Quarterly Taxes
One option you have as a freelance contractor is to pay quarterly taxes rather than yearly taxes. What this will mean is that every quarter you will go to your tax preparer or preparing service and file a quarterly tax return. You will then pay your taxes for that quarter and be able to determine how to prepare for the next quarter or if other services are available to your specific business.
These are just a few of the tax preparation services available to freelance contractors. Depending on your specific freelance business, you may have other services that are available to you. For example, if you are a self-publisher then your preparation service may be able to offer services and deduction options specifically for writers and self-publishers. You can discuss these and more services with your tax preparation service during your consultation.