As a freelancer, you’re an expert in your niche. But if that niche doesn’t happen to be finance- or tax-related, it’s best to get a tax preparer — fast.
When I first filed my taxes as a self-employed individual, I missed so many opportunities to save some hard-earned cash. Since I started working with a certified tax preparer, I’ve learned about uncommon business deductions, how to organize and maintain my records the right way — in case of an audit — and the set amount of sales tax I need to collect and remit on a state level. The right tax professional will guide you toward better savings and a more comprehensive financial plan.
What Should You Be Looking for?
First, you need to find someone trained in tax codes who understands the ins and outs of being a sole proprietor. Some tax pros work specifically with business-of-one folks, while others prefer to stick to larger corporations. Like you, tax preparers can have niche specialties.
Some tax preparers have taken the necessary steps to distinguish themselves from other professionals by joining a national organization. Of course, your preparer doesn’t need to belong to one of these organizations, but it’s certainly an added bonus.
Just be aware of the specific types of professionals the Internal Revenue Service (IRS) will accept as registered preparers before you search for professionals in your area. Typically, acceptable titles include tax attorney, certified public accountant (CPA), enrolled agent and enrolled actuary.
But how do you know who’s the right person for the job? The IRS suggests choosing a tax preparer who:
Is registered with the IRS
Has a positive history with the Better Business Bureau — with no disciplinary actions or lapsed licensing
Offers flat fees for services rather than fees based on a percentage of your projected refund
Has an active Preparer Tax Identification Number (PTIN)
Asks to see your receipts and records, including 1099 forms
Goes over a tax return with you before you sign
To find an expert who encompasses each of these traits, you’ll have to do a little research.
Where Can You Get Tax Help?
Inc. suggests that you start your search by looking through the membership directories of the National Association of Tax Professionals (NATP), The National Association of Enrolled Agents (NAEA) or the American Institute of Certified Public Accountants (AICPA). The IRS also offers a directory of tax professionals that you can reference.
Once you’ve found a few options, make some phone calls and ask potential candidates the following three things: Do they handle independent contractors? What are the fees to prepare your annual return? Can they assist with filing federal quarterly self-employment taxes and state sales taxes? Keep in mind, some tax preparers will quote fees per service, while others can be held on retainer for a monthly or annual fee. These three questions will guide you toward a tax expert who’s the right fit for your business and your finances. Don’t settle for someone who only hits on one or two of the bullets above — finding the perfect fit is worth the wait.
Doing It on Your Own
After you’ve worked with a certified tax preparer for a few years, you’ll probably start to feel confident enough to manage your freelance taxes on your own. Like many freelancers, I schedule quarterly tax payments on my work calendar so I don’t miss a deadline, and keep a folder of paperwork to help me fill out the Schedule C on my annual return each spring. Just remember: Save your receipts, keep detailed records, manage your deductions and stay on top of the specific forms you’ll need to get the job done.
All it really takes is some organization and a lot of repetition to get the hang of things. Paying your quarterly taxes does get easier, and it becomes part of your routine — especially if you have some parts of the process automated.
But until you get to the point where you’re comfortable tackling your taxes on your own, finding the right tax expert will be essential to keeping your business and finances running smoothly. Whether you’re just starting out or you’re a freelance veteran, it never hurts to have someone take a second look at your tax plan and help you get on the track to success.