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The tax deadline for 2015 is almost here. If you’re self-employed, you might be wondering what sort of taxes you need to file and what documents you need to keep.
This is a simple overview of the subject. I go into more detail in Enterprising Women: A Practical Guide to Starting Your First Business. I am not an accountant. If you have specific questions about your tax obligations, consult an expert.
The self-employed must pay self-employment taxes for social security and Medicare.
If you are a sole proprietor or freelancer, you need to file Schedule C to figure out your earnings. Taxes need to be paid if your net earnings were more than $400.
Of course, there are always exceptions to the rule. Caregivers, for example, have different rules to abide by because they are considered employees of the people they care for. Church employees also must follow different rules. Church employees must pay taxes on any income that is more than $108.
Individuals who earn large incomes can file their self-employment taxes quarterly instead of annually.
Documents to Keep
So what types of documents should the self-employed keep for tax purposes?
According to the IRS, they need to keep:
- 1099 forms
- Invoices and/or any other receipts from work performed
- Proof of purchase for items bought for your business
- Receipts for any expenses paid while running the business
- Travel expense receipts
- Invoices, real estate closings and cancelled checks related to the purchase of assets
- If you have employees, there are additional documents you must retain related to any wages paid.
All of this might sound complicated if you’ve never done it before. But there’s no need to worry. Once it becomes familiar, it’ll seem much easier. Good luck!
How organized are you with your record keeping?
Updated: 27 June 2018