🗳️ You voted for this week's topic...

Happy Tuesday, freelance friends!

Last week I ran a poll asking what topic you wanted to hear about this week. The results? Taxes! You all know how to have fun.

Side note: The other highly voted topic was how to stand out on LinkedIn, which I’ll jump into next week.

Let me start with a standard disclaimer that I am not a financial or tax professional. The thoughts I share are NOT ADVICE. These are simply some things I do based on my own personal experience. Also, I get professional help on my taxes - it’s something that has saved me a lot of headaches in recent years. Finally, just a reminder that I’m in the U.S. and that’s the only type of tax I have experience with.

Ok, now let’s jump in with some thoughts on lessons I’ve learned as a freelancer paying taxes on my earnings for 10+ years.

I like to call this, “How not to cry every April 15 (but maybe there’s still a little knot in your stomach).” 🤷🏻‍♀️

I keep my tax savings in a separate bank account.

Taxes aren’t a surprise. The exact amount owed may be slightly surprising, but in general, it’s an expense I account for. So I put money towards my future quarterly estimated payment every month. If I make more than usual, I put in a little more.

Regardless, it’s in an account that’s separate from any other type of expenses or savings.

I compare my revenue to previous years.

The longer I freelance, the more data I have on previous years’ final taxes. So I like to check in on how my current income and expenses compare to previous years and what my quarterly estimates look like. That takes a lot of guesswork out of my amount owed.

I formed an LLC taxed as an S corp.

As I grew my freelance income to the equivalent of a full-time salary, I consulted professionals and made the decision to switch from a sole proprietor to an S corp as an LLC. I did this with professional help from Collective, which specializes in financials for self-employed individuals. I initially had this bug put in my ear by an accountant then heard about it again from another freelancer before pursuing this change for myself.

I ask professionals lots of questions!

I used to DIY my taxes but now I realize it’s simply out of my area of expertise to keep up with the changes and intricacies involved. I use Collective for my bookkeeping and taxes so anytime I have questions, I have a team of professionals to ask. And anytime something new and relevant pops up, they reach out to me to make sure it’s taken care of.

This is by no means a comprehensive guide on taxes as a freelancer, but I do hope sharing some of my processes helps!

Happy freelancing,

Lauren

When you’re ready, here are 2 ways I can help with your freelance business:

Read The Fully Booked Freelance Writer to follow my exact process for keeping a full schedule (whatever that looks like for you).

Organize your business with my income tracker or pitch tracker.