As an independent professional, you know that taxes can be a bit involved. While there are plenty of write-offs and deductions you can claim, it’s also easy to overlook small details, or miss something you could be taking advantage of.
As a best practice, keep a detailed record of business activities, expenses, income, and receipts or records of expenses you plan to deduct. Honesty is the best policy here; underreporting income or trying to deduct things that don’t quite qualify as a legitimate business expense can result in an audit. If you’re unsure what deductions qualify, refer to the IRS guidelines, or speak with an accountant or bookkeeper.
In addition to making the most of tax deductions, be sure to set aside enough money to pay your quarterly estimated taxes. Quarterly payments help eliminate a massive tax burden at the end of the year both for you and for the government. As a reminder, independent professionals should expect to pay at least 30 to 35% of their gross income in taxes, which includes income tax and self-employment (SE) tax—both halves of Social Security and Medicare (FICA).