Taxes: if reading that word makes you internally scream, “Ahhhhhh!!!”, or if the mere thought of freelance taxes is preventing you from taking action, then this episode is for you.
Joining Nicki and Kate for this episode is the founder of Masterpiece Bookkeeping, Rachel LaMantia. Rachel and her team take the stress, hassle, and guesswork out of bookkeeping for their clients. They provide everything from a deep clean of your books to monthly bookkeeping support and even financial strategy and consulting.
As someone who has started several businesses herself, Rachel has some fantastic tips for making sure you’re keeping your finances in order. And—surprise!—you don’t need to purchase fancy software (or any software at all). She explains when you may want to hire a bookkeeper, why you need a separate bank account, and more! For more great tips, follow her and her team on Facebook »
A Sneak Peek at the Episode
[1:50] Rachel explains the difference between an accountant and bookkeeper and when someone would want to work with either one. Accountant is the umbrella term and within that there are different specialities, like tax preparation, audit, and bookkeeping.
[4:03] What’s the worse case for freelancers paying taxes all wrong? The worse case is if you don’t file your taxes and have to pay years and years of back taxes and penalties. Making a good faith effort is what’s most important. Estimated taxes are just that: estimates.
[7:20] Set aside somewhere between 20 and 40 percent in a separate account from each paycheck so you’re not surprised with a huge tax bill. How much you set aside depends on your tax rate. Rachel explains a few major things that can impact your tax rate.
[10:09] Rachel’s #1 recommendation is to set up a separate bank account and all money related to that. She also clarifies how your business structure may impact that. For freelance work, she recommends using a spreadsheet to track your income and explains why bookkeeping software is so much more than most people need.
[15:12] Scenarios where you may want to hire a bookkeeper include if it’s a pain point, if you start selling products where you have to deal with sales tax, if you hire employees, and other more complicated scenarios. And while it may be tempting to hire a virtual assistant because they’re inexpensive, you’re going to get someone who has no idea what they’re doing.
[17:40] Make a list of the things you least enjoy in your business and prioritize them in order of what you want to get off your plate. And when you make enough to get them off your plate, get them off your plate.
[21:00] Rachel digs into common deductions that freelancers miss, as well as items that freelancers try to deduct that are crossover between personal and business. She also notes how deductions like mileage are not ones you can guess at because they’re a huge flag for auditors. Freelancers often miss a lot of deductions because they don’t have a separate business account and miss expenses that are in their personal accounts.
[26:29] Schedule out time once or twice a month to keep up with your income and expenses.
Mentioned on This Episode
- Tax Preparation Myths (from Masterpiece Bookkeeping)
- How to Avoid a Major Tax Slap
- Tax Tips for Freelancers
- The Best (and Cheapest) Way to Track Freelance Income
- Tax Deductions for Copywriters
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About the Build Your Business Podcast
Ready to turn your love of writing into a successful copywriting career?
Join professional copywriters Nicki Krawczyk and Kate Sitarz to get the tips, tools, and training to help you become a copywriter and build a thriving business of your own. Nicki and Kate have 15+ and 10+ years of experience, respectively, writing copy for multi-billion-dollar companies, solopreneurs, and every size business in between.
Whether you want to land an on-staff job, freelance full-time and work from wherever you want, or make extra money with a side hustle, the best place to start learning is right here.