The Internet has opened up a whole new avenue for those inclined towards self-employment. Independent entrepreneurs such as freelancers and online business owners can take advantage of many perks: You set your own hours, decide how much you charge and enjoy the freedom of being your own boss.
Like any small business owner, you have to keep up all of your financial information in order to properly manage your practice. If you’re working online, then you need an accountant to help manage your funds, and the following reasons will outline why.
1. Higher Taxes
Many freelance people don’t realize that the government charges a significantly higher tax rate to self-employed people. When tax time rolls around, however, you might be shocked to find a large bill from the IRS. Taxes vary by state on top of the federal government’s charge. An accountant in your state who specializes in small businesses can help you figure out how to pay the estimated quarterly taxes and how to set aside additional money to offset a large bill.
2. Risk of an Audit
The IRS monitors self-employed individuals, particularly those working online, closely to make sure they pay their appropriate taxes. Certain triggers alert the IRS to potential fraud. Unfortunately, you stand a higher risk of being audited as an online worker even if you’re paying your proper taxes. Accountants know how to handle an audit, and they’ll keep adequate records to ensure that you’re staying above the line when it comes to money earned.
It’s easy to overspend when you work from home by yourself. Whether it’s because you didn’t set aside enough for taxes or got caught up in buying too much overhead supplies, you can find yourself short on cash by the end of the month. If you work online, you need an accountant to help keep you accountable for your spending. Working for yourself often leads to a sense of independence that translates into overspending. Don’t get carried away. Let an accountant help ease the burden.
4. Loss of Profit
With overspending comes a definite loss of profit. There’s no point in working online if you can’t enjoy the freedom that comes with it. Sadly, many people suffer huge losses that render this freedom void. Accountants can help you keep track of your money, which means you’ll actually gain a profit instead of staying in the red.
5. Maximum Deductions
Can you deduct that office space from your taxable income? Unless you’re well-versed in the art of tax deductions, then consider letting an accountant evaluate your deductions. You might be surprised by how much and how little you can deduct by working from home. The government closely scrutinizes individuals who earn money online; let an accountant help appease them by properly examining your deductible expenses.
Hiring an accountant might sound like an unnecessary expense, but if you earn your primary income online working for yourself, then you should consider investing in a professional to help manage your funds. When your tax bill comes, you won’t need to stress. Having made ample profits and managed your money wisely, you’ll be able to avoid a financial crisis. Working as a self-employed person online offers many advantages. Hire a professional accountant to help you enjoy those benefits.
This has been a guest post from Fonthip Ward who is a business consultant at http://mybusinessfirst.com.au