Written by Mat Casner

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Freelance CEO Podcast
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Ep. 16. Tax Tips for Freelancers


Freelance CEO Mat Casner
The Freelance CEO Podcast with Mat Casner
Ep. 16. Tax Tips for Freelancers


The subject of taxes is one of the less glamorous topics of being a freelancer, but it is very important. It doesn’t have to be complicated or scary. And today I’m going to share with you some simple ways to be prepared and confident when Uncle Sam comes knocking.

I want to set this up with a small disclaimer, guys. I’m not a tax advisor, an accountant or finance professional, and I don’t play one on tv.

I always recommend getting qualified guidance from a certified finance or accounting professional. So there’s my disclaimer before we get started here, but I do want to talk about how I have approached the subject of taxes in my own business. And hopefully some of these will help you as well. But I’m gonna share with you what I do because as a freelancer, you are a business owner.

So whether you are a partnership, a sole proprietor, a an L L C, or maybe a corporation like I am, there’s going to be some advantages that you can take advantage of because you have business related expenses. And those business related expenses can help reduce your tax burden when it comes to what you’ll end up owing Uncle Sam. So as we get started here,

I’m gonna share some tips and ideas and how you can help minimize that tax burden. The first one I wanna talk about is claiming the items in your home office. Okay? So if you’re a freelancer and you’re working out of a home office, then you are able to partially deduct portions of your mortgage interest, your rent, your utilities, your insurance, things like the internet that you’re using to, to run your business on a portion of those because you’re operating your business out of your home can be used as a deduction. So you’ll want to make a note of all of those things that you pay monthly or quarterly or annually as a homeowner and determine which of those are being used throughout the year by your business and make sure you make note of those.

Okay? As you consult and as you report to the government, you’ll want to add those as deductions, so anything that’s related to your home office. Number two, anything that you would use that would be considered a purchase or any other types of deductions. So whether that be advertising for your business, travel that’s related to business work that you’re doing, airfare, hotels, meals, mileage, anything that’s related to getting you to and from your client or your work outside of your office is possible for deduction. Furniture. Things that are being used that you purchase for your office. Computer equipment, office supplies, software, these are all things that can be used to claim as deductions. So if you haven’t already, get a piece of paper or open up a spreadsheet and start to make a list of all of these things that you have expenses throughout the year.

And these can be used as claimed deductions for your tax preparation. So we’ve talked about the home office, we’ve talked about, you know, miscellaneous purchases and deductions. Another thing that I recommend, and if you haven’t done this already, it’s great to start now, is start to categorize your business expenses. So keeping track of your business expenses is important because let’s just face it, at the end of the year and as you’re getting ready to prepare your taxes in the the months to come, you really don’t want to have to spend a lot of time sifting through the details of the past 12 months to find those deductions that are eligible for you to claim. So I recommend using a a, a piece of software that could be used to help you track your expenses.

One example that I use personally and I have for years is QuickBooks. QuickBooks. I use the online version and it allows me to quickly and easily go in and set up categories that are expenses that I have for my business. And then at the end of the year, I can quickly go in, I can create a report, I can sort by the expense categories that I’ve set up for myself, and when it comes time to claim those deductions, then the hard work has been done for me and those categories have already sorted themselves, and all I have to do is find the totals and plug those in. So I recommend using a a piece of software to help you stay organized throughout the year. So another thing that I recommend, and this is more of a general business tip, but because it’s tax deductible, I want to reinforce the the importance of work insurance. So this is not the health insurance plan that you have for your family. This isn’t your life insurance policy, this isn’t your car or home insurance. This is specific insurance that you procure just for your business. So what kind of business insurance would be deductible as an expense by the government?

Well, a couple are property insurance. So if you have expensive property equipment that you use with your business and it would be hard to replace or expensive to replace if it was ever stolen, broke or damaged, then you might wanna consider property insurance. It’s relatively affordable and can give you peace of mind just in case you happen to be a freelancer who travels a lot, who ends up being in situations where you know, theft could be a real risk. You wanna make sure that you’re covered so that you are not left high and dry if something happens to your equipment that you need to do your business and that expense that you pay for that insurance is deductible. It’s a business expense. It’s what you use to cover yourself.

So that’s just a tip. Another type of insurance that I highly recommend is general liability insurance. This is insurance that protects you as a business owner just in the event that something could, you know, in theory go wrong with a job with a client, something that will protect you and keep you protected in case of something like that, that would go wrong.

Of course, we never hope that we have to use insurance. It’s there to protect us when we need it. General liability insurance is easy to find. I simply recommend talking with an insurance professional. Perhaps you know someone, a friend in the insurance industry, ask them for some advice about property insurance for your business and general liability insurance for your business.

Both of those are tax deductible. I want to also say as we’re getting here, wrapping this up, that you want to make sure that you contribute to your retirement. Again, this is an expense that can be tax deductible. And if you don’t have a retirement plan, I strongly suggest you investing in one. And it doesn’t have to be a lot,

but I do recommend something because as a freelancer, as a small business owner, we have to make sure that we take care of ourself, not just now, but for the future because we’re not working for anybody else. We need to make sure that we do that for ourselves. So I know that you can go and get a individual retirement account at ira, a solo 401k. There are other investments that you can make throughout the year, and I recommend talking to a certified financial advisor and someone who can look at what you are doing as a business and make some recommendations that are affordable for you. The idea is that we just get into a habit of putting that money aside for our businesses because that will pay us later when we are ready to retire.

So those contributions that you make to your retirement can also be tax deductible. So that’s important. So just a recap here. You know, we want to make sure we’re claiming deductions that are related to our, our home office, a portion of that area that we live and work in. And we want to make sure that we are claiming deductions that are related to our advertising, travel, mileage, furniture, supplies, hardware, computer software, and then also the insurance that we get for ourselves and for the property or equipment we have. And then I recommend a software to be used to categorize your expenses as you move throughout the year so that that reporting can be easy and painless at the end of your year. And as you prepare for your taxes, you can call on that to get the numbers that you need. Again, I also wanna remind you that your retirement is important. Setting aside funds every month for your retirement and IRA and investment 401k is also tax deductible as well. In closing, I want to leave you with this huge pro tip, managing taxes, mining, managing finances for many of us is really outside of our skill.

For me, I’m a graphic designer, I’m a visual communicator. I’m not an accountant, I’m not a tax professional, I’m not a financial advisor. And really, to be honest, keeping up with Photoshop and all the changes with that and all the other design software throughout the year feels like a big enough challenge in and of itself. I really don’t want to have to think about the changes in tax law and how it affects my business, and how am I going to figure all this out at the end of the year so that I know that I’m not paying more than I need to, but I’m not paying less than I should, that I’m right there where I need to be. So what I do is I use my relationships with other professionals and barter services. So I have an accountant and I do pay them to take care of my annual tax filings my have for several years.

And I can’t tell you how much of a blessing it is for me to know that that is taken care of for me every year. But I actually trade services with my bookkeeper. My bookkeeper is someone who helps me with my monthly chart of accounts, with my bank statement, with purchases that I make, and I trade services with them. And I’m able to have the trusted resources of a bookkeeping professional, and that takes the weight off of my shoulders. In exchange, I provide them with knowledge, expertise, and services related to design and web development. Okay? So it’s a win-win for both of us. And at the end of the day, I don’t have any out-of-pocket expenses to help me make sure that my bookkeeping is done correctly and everything is ready to go at the end of tax time.

So I want you guys to, to take this, and I encourage you if you have questions, I encourage you to talk to a certified accounting professional financial advisor, insurance agent, and find out for yourself what is best for your business. At the end of the day. We want to be able to do the work that we do as freelancers without having to worry about the financial side, the tax side. We wanna make sure that we’ve got our bases covered so that we can do what we do. If you wanna get started as a freelancer, but not quite sure where to begin, then be sure to check out the Freelance Blueprint, a free resource that I created just for you. Inside the Freelance Blueprint, I share a detailed roadmap that you can follow to help you build a stable and profitable Freelance business.


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