Contract Worker - Freelancing Experiences

Avoid Tax Problems Now

by Rico on September 22nd, 2007

Freelancers will want to consult with an accountant and tax lawyer on a regular basis. It’s a great way to stay aware of how much the government thinks you should pay it, if only to avoid the stress we normally associate with losing a significant share of our earnings.

If death and taxes are both certain, then why aren’t taxes as straightforward as death? When you die, the only thing that matters is how your life ended. And even that isn’t important when you think about it, especially when you’re at peace.

Taxes, on the other hand, can be quite confusing. Which is why b5media’s Tax Girl is a helpful resource for US-based taxpayers. But Kelly’s posts won’t cover the infinitely different situations regarding the government’s cut. Nor does it apply to readers living outside the US.

I’m sure she’d agree with me when I say that regularly discussing your local tax laws and requirements with an accountant and tax lawyer are extremely important. Corporate workers usually rely on their accounting department to take care of the taxes, which is why a payslip is a list of figures and deductions, rather than just a simple statement stating how much you’ve earned for the month.

Granted, you can simply find out the default amount you have to take from your earnings. But I’ve heard of cases where a freelancer, handling their own taxes, suddenly discovers that they’re paying more than what’s needed. Why would your local tax collection bureaucracy waste time telling you that you’re paying them too much right?

An accountant can help you sort through the sometimes complicated paperwork needed to file tax returns. A tax lawyer, on the other hand, knows what laws apply to your situation, and when they do so. Tax lawyers also know how to legally lessen how much you have pay, such as setting up a corporation.

In fact, if you have many commitments to handle and find yourself with little time to handle the tax matters, it might be worth hiring an accountant and tax lawyer as a retainer. You can ask them to take care of boring yet important things such as filing income tax returns.

In short, with an accountant and tax lawyer by your side, you can concentrate more on getting things done, and make sure you’re paying the bare minimum of what you have to. In many ways, they can cut through the red tape that slows most bureaucracies down, because they know the system like the back of their hand.

Bonus Tip: Instead of working for a company, an accountant can actually freelance as a provider of crucial services for other freelancers: consultancy and legwork.

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POSTED IN: Freelance Finances