I still remember the days when “hashtags” were only about a particular button on your phone. Yes, the world has shifted massively underfoot. We all know it.
And one of the developments we’ve all seen is the proliferation of news feed folks, ready and willing to help you start your new business. What once was a sanctuary of grandkid photos and food pictures, has now become another marketplace.
There are so many great tax reasons to have a real business, even if it’s just a “side hustle” like the kids say.
And today I want to clear some of the fog around this topic, especially for your wallet — and your taxes.
“Real World” Personal Strategy Note
Tax-Smart Ways to Be Side Hustle Savvy
“The struggle you’re in today is developing the strength you need for tomorrow. Don’t give up.” -Robert Tew
Despite having full-time employment, many Americans need some sort of work on the side to supplement month-to-month living expenses. In fact, a recent MarketWatch survey says one-third (!) of Americans depend on a side hustle.
Do you fall into that category? If so, I’m here to help you figure out the (multiple) tax ramifications for self-employment. Whether it’s you or someone you know, I love to come alongside any endeavor that helps pay the bills. There’s no reason that tax questions should hinder you.
Here are a few tax tips, whether you’re in the middle of a side business or thinking about starting one, that will help keep your taxes in order.
Research and Report
There are a few basic differences between W2 and 1099 employees. And if you’re doing some freelance work for another business, they’re not required by the IRS to send you a 1099 unless they’ve paid you $600 or more. HOWEVER, even if you earned less than that, with no documentation required, your money is still taxable income.
I can’t overstate this enough: if you are earning money on the side, you are still responsible for keeping track of and reporting all earnings.
By Tax Day, you’ll need to report all earnings, with or without a 1099, to the IRS.
Many freelancers end up filing Schedule C as sole proprietors. You and I can tackle this document together, but it’s imperative your numbers are accurate for filling out each box.
These side gigs aren’t as simple as a childhood lemonade stand. That ice-cold cash is (sadly) not all yours. Unfortunately, this is taxable income we’re talking about and it’s vital to pay those estimated taxes…
…four times a year (April 15, June 15, Sept. 15 and Jan. 15). That’s right, things like self-employment taxes are required from all the strenuous (but fun!) work you complete throughout the year.
But don’t get discouraged! This is another part of the picture and it has to be accurate for continued success. Just one more reason I’m in your corner all year round.
Stay Healthy. Stay Hungry.
The IRS also wants to help the self-employed in regard to health insurance and retirement benefits. Those contributions can be deducted, but are filed on your personal tax return as an adjustment to personal income.
Now, I can help you with any of the aforementioned items. I know the tax side of self-employment can seem like a lot, but there are many benefits of self-employment if you can make it through tasks like filing your taxes.
Please reach out so we can get our first meeting on the books. No one should have to walk this path alone, for it can quickly lead to burnout.
You need a team around you, and I’d love to join.