Monday, April 18, 2016

Tax Day for freelancers: 2015 in review, and plans for 2016

Tax Day this year falls on April 18th -- something about them not wanting the next day to be Saturday.  This also means, for freelancers, that your first estimated tax payment is also due on the 18th.

My first few years of freelancing I was always ahead of the game, getting my taxes done early.  After a while, though, I stopped being as organized about recording my income and expenses throughout the year.  This meant that it all had to get done at tax time, which made preparing my return so much harder.  This, in turn, meant procrastination and last-minute filing.

This year, I did a little better, finishing my taxes a week ahead of time.

I'm already working on doing better at reporting my income and expenses throughout the year.  I keep spreadsheets to track everything, and theoretically this makes everything so much easier at the end of the year: I just copy everything into the tax forms, and I'm done.  So far I'm doing a lot better at keeping up on these things.  Plus, as a single freelancer, my taxes will be much simpler next year -- and I'll be able to do them much earlier (no waiting for W-2s to arrive in the mail).

I'm thinking about making a few changes to how I do things, though.  I've always kept track of my income by client, with each client getting their own page and an overview page totaling everything -- but I wonder if it would be better to reorganize my spreadsheets by month.  Knowing my income by month, and being able to see at-a-glance who I've worked for throughout the month, seems more useful than knowing the year-to-date total I've gotten from each client.  Certainly it would make estimated taxes much easier.

Fellow freelancers: Does anyone else keep track of their income in a similar fashion, and if so, how do you organize it?

My expenses spreadsheet is divided into the same categories as you find on Schedule C.  That makes filling out that form much easier, in my experience.  Rather than wading through piles of receipts, I just fill out the spreadsheet and make notes about each expense throughout the year (theoretically), and transfer all the figures onto the form at tax time.

What about you?  What system do you use to organize your income and expenses as a freelancer?

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