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9. Make sure to pay your taxes “as you go”

The US tax system is a “pay as you go” system, meaning you should actually be paying your tax throughout the year, and not just when you file your tax return. That whole owing vs getting a refund part is simply how much you’re over or under when you compare what your tax is to how much you’ve paid in. Back when you were an employee, your taxes were regularly withheld from each paycheck. As an independent contractor there is no employer there to do this. This IRS still wants THEIR money (I know, collective libertarian groan). So that means you should be making quarterly estimated payments or you’ll face estimated tax penalties.

10. Hire a good CPA

There’s no reason to stumble your way through tax and accounting. A good CPA will bring you enough value and save you enough time to more than pay for themselves. He or she will not just help keep everything in line should the IRS come knocking, but can also advise you on various tax planning strategies that will help reduce your overall tax liability.

 

 

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