Know Your Limits

Freelancers have to dabble in every area of business. Although issuing invoices and managing expenses becomes easier overtime, some tasks are not worth the effort. As a business grows, chances are the tax filing procedure will become more complicated. A freelancer with a booming business should know when to outsource work to others. Hiring an independent CPA to take care of the quarterly taxes is fairly painless if one can provide good records. Focus on finding a preparer who has experience with independent contractors. The small fee could end up saving money and a lot of extra work.

For day to day operations, an option might be to outsource your invoicing and receivables to a third party. Having an experienced firm bill your clients and do your collections may be worthwhile, as your time is better spent focusing on what you do best. Besides, it can help maintain good client relations to have someone else be the collections "bad cop." Some companies can even handle your quarterlies for you. If you struggle with your back-office operations as an independent consultant, look into outsourcing some of your business administration to an experienced professional services firm.

What are the advantages of Freelancing?

Those who freelance have complete control over their finances. They are allowed to file their taxes in order to take full advantage of their deductions and business expenses. Those working under an employer may not claim the same tax credits unless the employer is a certain kind of umbrella company, or "portable employer of record" specifically designed for independent consultants and freelancers. The freedom to be involved in their finances from beginning to end may be extra work, but freelancers often avoid overpaying taxes.

Independent contractors should make sure they save money to make their estimated payment at the end of the year. This might take some self-discipline, but at least a 1099 makes this an option. With some financial planning, and perhaps some help from experts, freelancers can breeze through tax time and avoid costly IRS penal

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