Health Insurance

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Life Insurance

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Home Owner's Insurance

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Advertising / Marketing

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Licenses

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Office Supplies

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Memberships

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Taxes

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Miscellaneous

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TOTAL EXPENESE

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You are going to need to guess or estimate for business expenses unless you have a full year of freelancing under your belt. Don't worry if your estimate is off, you can always readjust your budget next month. If you have been in business for more than a year, then use previous year's records to estimate this year's expenses.

In order to figure out taxes, first you need to come up with your target monthly income. Lets assume that your monthly target income is $2,500. The government wants about 45% of this money. But, this will depend on what tax bracket that you fall into and what state that you live in. Your taxes each month would be about $1,125. (When you are self-employed, you will need to pay quarterly taxes on April 15, June 15, Sep 15, and Jan 15.)

REQUIRED INCOME

After you have estimated what all of your monthly expenses will be, you need to figure out how much income you need to bring in. It is quite simple to figure this out. All that you need to do is add your target monthly income and your monthly expenses together. The number that you get is your required income. For example: If your target income is $2,500, and your monthly expense is $3,200, then your required income is $5,700.

Once you figure out how much income you are required to make to keep budget, figure out if your target income was too high or too low. Are you going to be able to make this amount of money each month? Review your numbers to assure that they match your goals.

Now you have an idea of what your cash flow should be like this year. As year goes on, you will probably readjust your budget a few times to meet new goals, increase your profit line, and anticipate problems.

Article submitted by http://www.Allfreelancework.com - 1000s of freelance jobs, articles, and resources.

The name and location of expense

Amount paid

Date and time

Company expense was incurred for

If an entertainment or food expense: person you entertained or dined

If an entertainment or food expense: discussion you had

2. Where You Live Vs. Your Income

If you live in a very high-income area, but you only claimed that you earned $15,000 that year, this is a red flag for an audit. The IRS will want to know how you spread $15,000 out to pay all your bills. Unless you live with your mother who pays mortgage or rent, there's no way that you could survive in Aspen on this income... and IRS knows it!

Also, if your income is much lower than last year's taxable income, this IRS will wonder where you're hiding money, and will want to investigate.

3. Avoid Inconsistencies

If there are inconsistencies, IRS will catch them. Be sure to file same information on your federal taxes that you filed on your state returns.

4. Don't Make Mathematical Mistakes

If IRS's computer system catches mathematical mistakes on your forms, a person will take a look at your returns personally. This is more attention than anyone wants spent on their tax forms, so make sure your math is correct before you file.

5. File a Neat Return

I recommend typing up or "efiling" your returns. If your returns are hard to read, you might have to translate your returns over phone or in person.

6. Report All Your Income

It sounds like common sense, but some people are tempted to be dishonest. Your clients must issue you and IRS a 1099 when you are paid over $600. This means that government knows what you were paid on each job. Report right amount on your taxes to avoid an audit.

Article submitted by http://www.Allfreelancework.com - 1000s of freelance jobs, articles, and resources.