Well, it is that time of year again here in the United States of America when we have to determine what portion of our income is rendered unto the government and what part might be returned to us. Early on as a freelancer, my income was minimal and I had no expenses. Taxes were pretty simple. Last year, I encouraged myself and my readers to keep good records for taxes, which manages these simpler taxes well. That post spawned some good discussion in the comments and on social media. I am hoping for some more discussion expanding that topic of taxes.
This is my third year as a freelancer, and my workload and finances have increased each year, along with my business expenses. There are various options for filing freelancing income, from personal income to being a fully incorporated business. This year, I am contemplating what I need to do next. With my increased work has come increased income which is great, but it has also meant increased complexity. Larger projects have required more extensive contracts, W-9s, and NDAs. I am beginning to ponder if it is time to become a limited liability company (LLC) or some other business incorporation.
I will be meeting with my tax preparer in the next couple weeks and will be discussing this with him. I might also reach out to a legal counsel to ask some questions about LLCs and small business incorporation. I really am interested to know how you manage your freelance income from a tax perspective. Do you view it as extra income, or are you a business of some type? If you are willing to share publicly, please post in the comments. If you prefer to me more private you can email me or message me online.