You might have started out designing websites for friends in your free time. However, if you are starting to accumulate clients and are billing others for your time, you need to start thinking as a professional freelance web designer. If you use the tips below, they may be able to help you with financial issues you may face.
Keep Good Financial Records
Because you're working out of your house, it's natural that you might keep all of your freelance records together. You might have software receipts, old invoices, gas receipts from visiting clients and any number of other financial documents in one single pile on your kitchen table or in a corner of your office.
This can be a big problem for you when you need to file your taxes. You may not be able to prove all your expenses because you can't find relevant receipts, for instance. You might not be able to get all the deductions you're entitled to. That's why it's vital to be as orderly as you can. Even a simple folder system for different kinds of receipts can make things easier for you when you need to locate different information.
You may think that you've cleaned up your records if you use a bookkeeping program on your computer, but if you do this, it is important to back up your records on a regular basis. It might also be wise to periodically print reports so that you can use them during tax season or present them to your accountant or tax preparer.
Keep Freelance Records Separate From Personal Records
A mistake made by a lot of new web design freelancers is that they pay for business expenses with their personal credit cards or put project deposits into their regular checking account. This can cause a headache when you need to pay your taxes because you have to sort through thousands of transactions to sort out your web design payments and expenditures.
Instead, ensure that profits and expenses from your web design business go into a business account.
Know When to File Your Taxes
You may already be used to filing your taxes every year because of a salaried job. However, because of your freelance web design business, you might now be considered self-employed. This is generally the case when you have made an amount greater than $400 in a single year from designing sites for clients. As a self-employed person, you may be responsible for quarterly tax payments. To know for sure, it's vital that you consult a tax preparer who has worked with self-employed people.
These are a few things you may need to know when designing sites for others in a freelance capacity. Work with a tax preparer or accountant who can give you more guidance about how you should handle your finances. For more info, contact a firm such as Groskreutz, Schmidt, Abraham, Eshleman & Gerretse CPA.Share