• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Submissions
  • About Us
  • Contact Us
  • May 19, 2022
  • Startup
    • Creating a Plan
    • Funding a Startup
    • Franchise Center
    • Getting Your Office Ready
    • Making Your Business Official
    • Marketing Your New Business
    • Personal Readiness
  • Run & Grow
    • Customer Service
    • Human Resources
    • Innovation
    • Legal
    • Operations
    • Risk Management
  • Leadership
    • Best Practices
    • Communication
    • Green Initiatives
    • Open Culture
    • Strategic Planning
    • People Skills
  • Sales & Marketing
    • Advertising and Lead Generation
    • Marketing Innovations
    • Marketing Plans
    • Online Marketing
    • Relationships
    • Sales Activities
  • Finance
    • Budgeting and Personal Finance
    • Payments and Collections
    • Tax and Accounting
    • Pricing Strategy
    • Working with Investors
    • Working with Lenders
  • Tech
    • eCommerce
    • Hardware
    • Software
    • Security
    • Tech Reviews
    • Telecom
  • Shop

SmallBizClub

Helping You Succeed

Home / Finance / Tax and Accounting / 5 Tips on Managing Your Income as a Freelancer
5 Tips on Managing Your Income as a Freelancer

5 Tips on Managing Your Income as a Freelancer

1326 Views

Sep 30, 2014 By 1800Accountant

Maybe you work as a freelance writer, crafting compelling pieces of marketing content for your clients’ websites and social media accounts. Perhaps you’re a freelance musician, playing country music on your guitar at local venues in your area. Or maybe you work as a business consultant, assisting CEOs to improve their management strategies. Freelancers come in all shapes, sizes, and industries. Earning income as a freelancer can be a little scary and challenging at times. So here are 5 quick tips on managing your income as a freelancer:

1. Buckle up for a rollercoaster ride.

When laboring as a freelancer, it’s often tough to establish a consistent stream of income. You might work on a project for a few days, weeks, or months, and then you’ll have to look far and wide to find your next contract. This is why having a plan in place to help get you through the uncertain times is a must. Set aside a certain amount of any money you make to have as a backup, especially income you receive that is above-average from what you normally earn each week or month. Also, avoid spending any money you anticipate will be replenished when getting a new gig because there are no guarantees on this.

2. Be aware of your IRS tax deductions.

While freelance expenses can be big, the good news is that a good amount of these costs qualify as IRS tax deductions. You could write off home office expenses, use of your personal vehicle, airfare, hotel accommodations, services like online backup subscriptions, and equipment and tools. Keep in mind that these expenses must be ordinary and necessary for you to conduct your freelance work to be deductible.

3. Report all income and pay the appropriate taxes on it.

Just because you don’t work for an employer that withholds taxes from your paychecks like Social Security and Medicare taxes doesn’t mean you are exempt from paying Uncle Sam. Many freelancers assume that cash payments don’t have to be reported as income. This is a very bad and incorrect assumption. Any income you generate through work must be reported to the IRS, and you must make any tax payments you owe on it in a timely manner.

4. Keep tax payments and retirement in mind.

As a freelancer, you may be on the hook for paying your own taxes, such as making quarterly estimated tax payments throughout the year. Learn about the deadlines you must meet and how to estimate these payments based on income projections. As for retirement planning, money is often tight when working as a freelancer. But always account for your future by doing your best to set aside a little money for savings purposes. This could be as little as $100 per month. You certainly don’t want to be a pauper in your golden years.

5. Insure yourself and your business.

No matter if you’re a simple sole proprietor or operate a formal small business as a corporation or LLC, it’s important to protect yourself and any business assets you own with insurance. Get disability insurance in case you are unable to work. Consider a health insurance plan, liability insurance, and other types of protection that can help you sleep easier at night.

This article was originally published by 1800 Accountant

Filed Under: Tax and Accounting Tagged With: 1800 Accountant, Accounting, Financial Management, Freelancers, Taxes

1800Accountant

1800Accountant

1800Accountant is a national accounting firm that assists small and new businesses in all 50 states, Canada, Australia and the UK. Our mission is to provide small businesses with affordable accounting and tax preparation services. Our experienced team of over 100 in house tax professionals is ready to start working for your business today. Call for a free consultation.

Related Posts

  • Considering Cloud Accounting Services? Here’s What You Need to Know
  • Employers: IRS Changes Payroll Tax Form 941 For Q1 of 2022
  • 5-tips-on-managing-your-income-as-a-freelancer5 Skills That Every Freelancer Must Have

Primary Sidebar

bottom line ad

Random

looking-for-a-loan--go-local--small-business-owner--go-local-

How To Make Sure You Can Pay Back a Business Loan

May 19, 2022 By SmallBizClub

Why Dropshipping Can be The Hallmark of Outsourcing for Your Business

May 19, 2022 By Efrat Vulfsons

convert-non-commercial-space-into-an-inspiring-office

5 Reasons Why Your Physical Office Layout Matters

May 19, 2022 By Boris Dzhingarov

10 Keys To Tapping The Hidden Power Of The Best Story

May 18, 2022 By Marty Zwilling

3 Most Devastating Small Business Pitfalls (and How to Avoid Them)

May 17, 2022 By SmallBizClub

Footer

About Us

Small Biz Club is the premier destination for small business owners and entrepreneurs. To succeed in business, you have to constantly learn about new things, evaluate what you’re doing, and look for ways to improve—that’s what we’re here to help you do.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Copyright © 2022 by Tarkenton Institute, Inc. All Rights Reserved | Terms | Privacy