Advice for an Independent Contractor (Self-Employed)

[earthling2005]

What is the name of your state? NY

Hi,

I was wondering what is the best way to save money and reduce my taxes. Someone suggested I take my income from self-employment, and put it into a business account? How will that benefit me?

I am also saving receipts for many things, in order to write off as expenses later on. Is there anything else i should be doing now to prepare myself. I've only been self-employed since April. When will I have to pay my taxes, as they aren't taken out of my check.

Thanks

 

[LdiJ]

What is the name of your state? NY

Hi,

I was wondering what is the best way to save money and reduce my taxes. Someone suggested I take my income from self-employment, and put it into a business account? How will that benefit me?

I am also saving receipts for many things, in order to write off as expenses later on. Is there anything else i should be doing now to prepare myself. I've only been self-employed since April. When will I have to pay my taxes, as they aren't taken out of my check.

Thanks

Putting your self employment income in a business account will not help you to reduce taxes.

Saving receipts for legitimate business expenses is critical. Its good that you are doing that. I would also recommend investing in some accounting software (quickbooks is good) to track your income and expenses. It will save you alot of time and effort...and maybe some expense as well, come tax preparation time.

The first year of self-employment you can pay your taxes when you file your tax return. However, from that point on you will be required to pay quarterly estimated taxes.

You need to prepare for at least 30% of your NET self employment income (income minus expenses) to be needed to cover your social security, medicare, federal income and state income taxes.