Are you living your best life as an independent contractor? Or curious about how you can start living your best life as an independent contractor?
There are many benefits to being an independent contractor, but a lot of work you need to do yourself. There are many questions, like, how does an independent contractor pay taxes?
The good news is that there is an answer and that taxes don’t have to be a huge downside to following your dreams! Look no further than this quick and simple guide for an explanation.
Register
First, you need to register your business and get ready to check the role of “Sole Proprietor” since you’re the point person for yourself. This is mainly for those who have their own business brand.
You can still be a sole proprietor without registering your own business. This is normally the deal for independent contractors that are freelance writers, accountants, or landscapers, etc.
Either way, what matters is that you know your titles, you have your business registered (if needed), and that you have been keeping track of the money you have been making.
Forms
Next comes the fun of the forms.
Whether it’s through a payroll check template or some fancy accounting software, you’ll need to take all of your recorded income and fill it out on a W-9. If you’ve worked as an employee before, you’ll remember that they normally give you your W-9 filled out ahead of time.
Now that you are your own employer, you’ll need to do that on your own. But it’s not too difficult so long as you’ve been keeping track!
You should also expect to receive some forms from clients, specifically a 1099-NEC form if you’ve received payments of over $600 from them.
Deductions
Finally, you also need to assess the amount of money that you can deduct from your taxes. You can get deductions for a number of things, from the cost to advertise your company to rent or lease payments.
That’s why it’s important to keep a record and to take advantage of all the things you need to do as an independent contractor. They can help you out a lot!
Need Some Help?
It’s also important to mention that many people (regardless of if they’re independent contractors) get some help with their taxes. There’s no shame in that!
In fact, you can support another independent contractor and hire a freelance accountant to help you sort everything out. It’s not for everyone, but it can definitely help take a lot of stress off your back if you feel overwhelmed.
How Does an Independent Contractor Pay Taxes: Answered
And there you have it! The answer to the question, “How does an independent contractor pay taxes?”
Now you’ve got one more curiosity fed, and you can take the next step to work on your own time or starting your small business.
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