Tax Planning Tips for San Diego Self-Employed Professionals

 

Taxation is tricky business when you work as an independent contractor in San Diego. While you don't have an employer withholding money from your pay check or paying into benefits, it falls on you to make quarterly payments and plan out deductions and long-term financial goals. However, with a little know-how, you can ease some of the stress — and save yourself some money — by following these tips from Accountant San Diego Taxes for tax planning.

1. Maintain Year-Round Records

The best way to prepare for a surprise at tax time is by staying organized with records of all sources of income and expenses, digitally or in a secure file. Use accounting software or speak with Accountant San Diego Taxes about how to organize and maximize deductions.

2. Know How to Take Full Advantage of Deductions

Self-employed professionals can take advantage of many tax deductions, such as home office, mileage, business travel, internet/phone costs, and even professional development.

3. Save For Quarterly Taxes

The self-employed pay taxes differently than traditional employees do; failure to make quarterly estimated payments will result in penalties. It is wise to set aside 25%–30% of each check for taxes, although a San Diego, CA, accountant can assist with estimating those payments and avoiding surprises.

4. Make Contributions to a Retirement Plan

While you might not have access to a company-sponsored retirement plan, there are still ways to invest in different options that allow tax-deductible contributions, securing your financial future.

5. Keep Your Personal and Business Finances Separate

Open a business checking account and credit card to keep track of your deductible expenses easier, and prepare for any audits that may occur in the future.

6. Hire an Expert

Tax laws change often, California has its own set of tax regulations, and you need someone who knows how to stay compliant and take advantage of every deduction possible, proactively, not reactively.

7. Review Annually; Plan Ahead.

Wait until tax season? Don’t wait for tax season to begin to plan. An annual review of your finances with an Accountant in San Diego, CA, could uncover areas where you can save or new ways the tax law has changed that will allow you to take advantage of new deductions you may qualify for.

Final Thoughts

Being self-employed provides a certain amount of financial independence but also some accountability. Planning ahead, making sound decisions, and utilizing the services of a professional are keys to preparing for tax season. Take the time now to do your taxes right so that later you can be grateful.