I'm in a rare situation where I'd be able to freelance full time and earn enough money to support myself and I just had a couple of questions for the freelancers out there. Please forgive me if these are stupid questions...
My first question is about taxes. What exactly is the process for paying the taxes? Do you guys just pay the IRS directly, and how often do you pay? Every time you get paid? and how do you know how much to pay? I have an accountant that I use to do my income tax return, should I consult her?
My second question is about health/dental insurance. I know it would be my responsibility to take care of that myself, but I wanted to know specifically what my options are. I've done some research and found places like freelancers union that are specifically made for independent contractors. Should I just contact insurance companies directly to find out what I should do?
Any info you guys can provide me would be greatly appreciated. Thanks in advance.
http://ben-reynolds.com
Animation and Design
Talk to your accountant.
Ignore anything else "We" say, because its all just hearsay.
An accountant is the one with the proper info for you, them or the IRS itself. They can provide you with the straight info on what you are obligated to do, and whatever options you might have PLUS any schedules you might need for paying-as-you go.
Also the accountant can be a valuable source of info as to what deductions you can take and when, and how to arrange your business so you can fully and properly maximize the use of deductions.
Make certain to mention any related hobbies you undertake that can have benefits in this manner.
An hour's consultation could have you nicely set up for many years hence.
On insurance: understand that insurance companies themselves might be the best and WORST place to get into from on this--because they have a vested interest in selling you something the moment you show interest in them. That and trying to get the most dollars out of you that they can.
Really, really shop around ask a LOT of question---nothing will be too dumb or obscure to ask. Leave NOTHING to chance with them.
You'll be better equipped to find the right coverage for you, and will probably pay less out-of-pocket for it too if you take your time.
The accountant may also be able to give you some professional guidance on the insurance matters too.
"We all grow older, we do not have to grow up"--Archie Goodwin ( 1937-1998)
wow, that was a fast response!
All great advice, I'll definitely meet with my accountant. I didn't even think about deductions.
I just thought of another question, (again forgive me if this is a stupid question) but as a freelance artist are you required to have a business license?
http://ben-reynolds.com
Animation and Design
Business licenses depend upon your jurisdiction, and tax laws. You MIGHT be required to have a valid business license in order to incur deductions for tax purposes--this is something that an accountant can probably answer for you.
In Canada, no business license is required for a home-based sole proprietor-ship--such as a freelance cartoonist. The Canadian tax laws state that " any endeavour that has a reasonable expectation of profit can be considered a business, and thus can take business expenses as deductions for tax purposes.
That provide a considerable amount of leeway in how to go about doing a business up here.
In the States, the IRS might have certain requirements that you may have to uphold/abide by. Things like your business MIGHT be required to show a profit of any amount by a certain time after you start it.
Again, an accountant can answer these kinds of questions.
Trust me on this: sit down with an accountant for a hour or two; explain what you want to do, ask your questions, make notes of the answers. You might pay some $$$, but the answers you get will save you THOUSANDS each year after, and the info should be usable and viable for many years to come.
A LOT of people think tax stuff is hard and extremely complex--I think that is a gross myth. Armed with some basic knowledge ( such as what deductions you can take) any freelance artist can navigate the tax process and use it to benefit their own bottom line.
"We all grow older, we do not have to grow up"--Archie Goodwin ( 1937-1998)
Congrats! Find an accountant that has worked with artists, that way he/she will know what you can and can not deduct. You don't want to mess up on your taxes and get audited. Once you get audited, you'll always be on their radar.
Aloha,
the Ape
...we must all face a choice, between what is right... and what is easy."