3 Strategies Freelancers Can Use to Make Tax Prep Easy
Taxes can cause a great deal of confusion and frustration for freelancers, but you don’t have to dread the April tax deadline if you have your ducks in a row. Incorporate the following strategies into your daily routine to make your tax preparation easier to manage.
Digitize your receipts.
A stack of faded and torn receipts is not helpful when it’s time to figure your deductions. Keep your expenses organized by scanning receipts after each purchase. Take a photo of your receipt before you leave the store with apps such as Scanner Pro and Scantastic. These tools, accessed online or from your smartphone, can upload your receipts to cloud services immediately. You can also use an accounting application that offers a receipt input option, such as Wave Accounting.
Store these images in your Google Drive, Evernote app or DropBox account for easy access. Apps such as Evernote keep a running total of receipts, so you have a clear idea of how much you have spent on work expenses long before the April filing deadline.
Streamline your invoices.
Save yourself time and trouble by using online accounting services that track your invoices and payments. Programs such as Freshbooks, Wave and Quickbooks send invoices to vendors and track payments all in one place. Many online accounting programs offer free trials to minimize your expenses; however, if you do pay for premium services, you may be able to include this expense as a tax deduction.
Set aside funds.
To avoid the surprise of a large tax bill and the possibility of having to drain your bank account, set aside funds for quarterly tax payments ahead of time. Qapital is a free application that connects your checking account to an FDIC-insured account. All you have to do is select the percentage of your income you want to set aside for quarterly payments, and the app automatically transfers money from your checking account to your FDIC account. When it’s time to pay your quarterly taxes, you can use the FDIC account to pay your taxes, or you can transfer the funds back into your checking account.