The Independent Creative's Guide to Tax Resources
Want to know the key to taxes? It's pretty simple: Get your shit together and then get some help.
Being organized throughout the year is the number one way to make sure that you aren't scrambling come early April. So, if you haven't started yet-- start now. We're not tax professionals and we won't pretend to be. So instead, we'll connect you with tons of resources and some tips to make sure that you get yourself right with Uncle Sam before April rolls around.
Throughout the year it is crucial that you keep expert track of 2 main things:
- Income related to your business
You've got a record of everyone you sent an invoice to, hopefully. And you should get 1099s from anyone who paid you more than $600. But keeping all of your business earnings in one neat place will make tax time a breeze.
- Expenses related to your business
This one's a little trickier. How much did you have to spend to be successful this year? (Hopefully less than you made!) This is where you need categorized totals. This isn't just a lump sum number, because businesses' expenses have different values in the eyes of the tax code. Here's the list of categories.
Here's the kicker: the IRS is not going to take your word for it. You've gotta have receipts for every single expense on file just in case the man comes knocking.
- The IRS has a very IRS-y (read: not super approachable) guide to deductions.
- The Freelancer's Union has a Guide to Deductions here.
- AND CO's got 10 Tax Breaks that Freelancers Should Take Advantage Of.
Find yourself a CPA. (While you're at it, find a nice therapist and a strong masseuse.) But really, the US Tax code has over 3.7M words, that's significantly longer than both Moby Dick and War & Peace put together, and a lot less interesting. A CPA will make sure that you have everything covered and will also help you maximize your deductions to maximize your return. The Small Business Administration thinks you should have a CPA too.
CPA's don't have to be super expensive and while we still envision them punching the adding machines with paper rolling out onto the floor, many CPAs can work totally virtually now. So a great way to find a trustworthy CPA who specializes in influencers/content creators, would be to ask some of the awesome people you follow and admire for recommendations.
Have you been paying quarterly taxes? I hope so.
Remember when you had that cushy desk job and every one of your checks had a certain amount of tax withheld? Then at the end of the year, you usually got a return. That was your employer withholding the estimated amount from your checks and the overage is the difference between how much you actually owed vs the estimate your employer made on your behalf. Since you're the employer now. This is part of your job.
Read this to understand more about why they're important. The IRS provides the 1040-ES Worksheet to help you estimate your quarterly taxes or you can check out the And Co Quarterly Tax Calculator Bot.
- The Freelancers Union is just badass. They're dedicated to educating and empowering freelance workers and making sure they don't get taken advantage of. They have awesome tax info including their straight up "First Time Freelancer's Guide to Tax Season."
- And Co is an app that helps you with... well just about everything a small business owner could need, they handle all admin tasks like invoicing, expense tracking, and they can even automate your deductions. Bonus: their blog is a goldmine of general and tax info. Like these 7 Commonly Missed and Miscategorized Freelance Deductions.
- Investopedia has this article on 7 Ways to Avoid Self-Employed Tax Penalties and lots of definitions of tax related terms.
All this sorting out of receipts, converting to spreadsheets, and categorization of deductions got you down? Consider employing a service to handle this throughout the year so that next tax season will be a breeze. Here's a couple to consider:
Freshbooks is cloud-based small business accounting software that covers everything from invoicing to time tracking. Pricing is based on active clients, instead of monthly fee.
Bench is an online bookkeeping service that pairs you with a real-life dude who handles your bookkeeping for you. Packages start at $125/mo.
17 Hats bills themselves as a "ridiculously easy all-in-one business management app."
Quickbooks is the "#1 accounting solution for small businesses." And they do have the rep as the big dog in this space. Independent contractors (self-employed) pay as little as $10/mo.
Kashoo says they are "way easier than Quickbooks."
Xero says they're an "online alternative to Quickbooks"
Creative Community Director at Snapfluence.
There is often a pen stuck in my hair.