Comments on: #1 Freelance Tax Mistake and How to Avoid It https://filthyrichwriter.com/copywriting-qa-how-to-avoid-a-major-tax-slap/ Tips, tools, & training for new and aspiring copywriters. Tue, 19 Mar 2024 12:23:21 +0000 hourly 1 https://wordpress.org/?v=6.6.1 By: Nicki Krawczyk https://filthyrichwriter.com/copywriting-qa-how-to-avoid-a-major-tax-slap/comment-page-1/#comment-412088 Thu, 14 Mar 2019 10:40:56 +0000 http://filthyrichwriter.com/?p=582#comment-412088 In reply to Mike.

Hi Mike,

Yep, there’s something similar in the States. *For anyone reading, I am NOT a tax preparation professional; please consult an accountant or licensed tax prep pro.* You’re required to legally form a corporation and then you can pay yourself a percentage of the income as a salary and avoid paying self-employment tax on anything above that salary, but for most freelancers, it’s not going to be worth the hassle and it make more sense for them to keep filing as sole proprietors. Thanks for pointing that out, though!

Nicki

]]> By: Mike https://filthyrichwriter.com/copywriting-qa-how-to-avoid-a-major-tax-slap/comment-page-1/#comment-412063 Wed, 13 Mar 2019 22:09:46 +0000 http://filthyrichwriter.com/?p=582#comment-412063 Not sure how it works in the US but here in New Zealand if you operate as a freelancer under a limited liability structure you can become an employee of your own company. That way, you pay yourself a salary and file monthly with the IRS. You then pay your taxes monthly instead of leaving it until the end of the year with a huge lump sum to pay. I also use accounting software which is linked to the company bank account and will keep track of my salary payments and how much monthly tax I have paid. It’s worked out to be great system for me (being a person who has been in tax trouble in the past).

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