The freelance checks are rolling and your income is adding up fast. Score!
Not so fast.
Your freelance checks are not taxed individually, but that doesn’t mean your income is tax-free. Whether you’re a full-time freelancer, part-timer, or just work on contract projects here and there, it’s important to know how much of your freelance income needs to go towards your tax bill.
As 2017 comes to a close, it’s a great time to review your project income and get an idea of what you may owe once taxes come due. Better to get a general idea now and start saving (if you haven’t already), than be blindsided when you fill out your tax forms.
To get a general idea of what you’ll owe, free tools such as The Freelance Project Tax Calculator can be helpful. This calculator, which is a collaboration between CPAs at Atribus Solutions and Sail, can be downloaded via email after submitting a request on the Sail website.
It’s compatible with Google Sheets and Excel, too, so use whichever spreadsheet program you prefer.
Whether you are completely self-employed or freelancing on the side, the Freelance Project Tax Calculator can help you determine the amount you should be saving for taxes. You’ll just have to share some general information about your filing status, location and projected income. It can also take project costs into account, allowing you to more accurately calculate net profit after deductions – and a good way to keep every aspect of each project organized.
If you are a freelancing newbie, toying with this calculator can also help you establish rates that allow your net income to be at the level you want (or need) it to be.
Now, keep in mind that this calculator provides rough estimates to get you started. If you want a more concrete number or in-depth financial advice, it’s time to find an accountant. But it never hurts to start planning ahead for tax expenses, and this tool can help you do just that.