From Making a Living Writing:
Running a business — and that’s exactly what you’re doing as a freelancer — isn’t all sunshine and rainbows.
There are lots of things freelancers have to do behind the scenes to keep their business running, and not all of them are fun. Some of these tasks flat out suck.
One of the biggest headaches encountered by any self-employed individual is how to do taxes as a freelancer. Paying your self-employed taxes can be a minefield if you don’t have the right advice or help, but luckily there are some ways you can get through this minefield unscathed.
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What is Self-Employment Tax?
Self-employment taxes cover Social Security and Medicare taxes for people who work for themselves. These taxes are similar to the taxes withheld from the pay of most regular employees.
What is the Self-Employment Tax Rate?
The current self-employment tax rate is 15.3%. The total is comprised of two parts — 12.4% for Social Security and 2.9% for Medicare.
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5. Avoid These Common Pitfalls
In addition to the steps you can take outlined [in the OP], there are several common mistakes you should try to avoid as a freelance writer.
- Don’t assume that your earnings are too little to incur taxes. If you earn just $400 or above as a freelance writer, you have to pay self-employed taxes.
- Don’t try to avoid declaring all of your freelancing earnings. Getting into a bad situation with back taxes or even an IRS audit could put a huge damper on your freelance writing career at any point in your career. Even if you didn’t earn enough with a particular client for them to issue you a 1099, you still have to claim that income when filing your freelancer taxes.
- Don’t wait until the last minute to prepare your taxes. I get it, nobody actually wants to sit down and get their taxes prepared. I can think of a million things I’d rather do before dealing with my taxes, but the reality is the longer you procrastinate, the bigger the risk is of something going wrong. Don’t wait until April 14th to get your act together. Start ASAP and get it over with.
- Don’t spend your freelance income loosely. If you’re serious about your freelance writing career, treat your freelancing income as you would any other income. Even if it’s just a few hundred dollars at first, if you want to become a full-time freelance writer, re-invest that money into your business. We all start somewhere.
Link to the rest at Making a Living Writing