If you’re like me, you began freelancing as a side hustle for a friend and then you got a referral and before you knew it, you got burned by a client who was a friend of a friend of a friend and that’s when you realized:
I'm a business owner. Now what?
Or maybe you always knew your entrepreneurial spirit would lead you here, but didn’t realize how much paperwork comes with following your dream. (Taxes anyone? How is it always tax season?)
Nacondra Moran from Exceptional Tax Services shared with us some best practices to set up your freelance business to make your tax season easier that will also help your business hum along the rest of the year as well.
I already mentioned the extra paperwork that can come with following your dreams. Do I have my own business account for expenses? No I do not. Do I know I should? Yes I do. (Maybe we can do this together?)
Opening a business account will only help you - both with your taxes and helping you keep an eye on the profitability of your business.
Moxie can help you keep your finances organized all year round with our accounting suite that tracks your invoices, income, and expenses (including an integration with Plaid that lets you auto-import your expenses from your business account).
Nacondra teaches the 50-30-20 money framework way better than I can summarize here, but at the core, it’s finding a flexible framework for your income so that you’re always planning for the future with set amounts each time you get paid for taxes and investment in your business. And of course, making sure that you actually get paid yourself!
In the US, freelancers are required to make quarterly estimated payments because taxes are meant to be “pay as you go.” If you had a W2 job, you never saw this money in the first place unless you read about it on your pay stub. These quarterly estimated payments function in the same way. Yes, it's not fun. Yes, it is necessary. Yes, it can be difficult and nerve-wracking if you're like me and you're not totally sure what to do which leads me to...
There is no shame in asking for help, especially when it comes to something as important as your personal finances. An accountant is an investment in your business helping your protect your finances and keeping you on track with tax payments.
Nacondra’s workshop was an incredible one for any time of year, but especially when tax time is giving you the sweats. Make sure you check out the Q&A section of the workshop if you have questions about LLC’s and S-Corps (because don’t we all have questions about those?).