Why Should Freelancers Hire a Specialized “Accountant for Freelance Workers?"

In a recent study conducted by The NYC Mayor’s Office of Media and Entertainment and by Upwork, it was determined that one in three New Yorkers is freelancing and that this workforce contributes more than $31.4 billion annually to the city’s economy.  Well then, the IRS may have an eye out for how much freelancers in New York City earn!  Hiring a specialized accountant for freelance workers to manage your finances would seem like a sensible approach, unless you are a tax expert yourself.

Hiring an expert Certified Public Accountant, “CPA,” has many benefits.  Let’s discuss them in detail.

• Deal with Income Taxes

Taxes are difficult to handle.  If you are a regularly salaried person, then plugging your Form W-2 into tax preparation software is all that you need to figure out.  However, when it comes to freelancing, US tax law interprets freelancers as self-employed individuals.  As a result, you need to pay self-employment taxes as well.  You may receive a Form 1099-MISC from your income sources.  Regardless, you will have to fill out an income and expenses report, called a Schedule C, to provide the IRS with necessary information on your year’s financial activity.  From there, it can get quite complicated to file income taxes for freelance workers when you are self-employed.  So, your accountant deals with taxes on your behalf and ensures that everything goes right in reporting your financial activity to the IRS.

• Suggest Methods of Saving on Taxes

Freelancers have some leverages that regular, salaried individuals don’t.  You may not be aware of some of the business expenses that are deductible on your tax return.  Accountant consultants for Freelance workers analyze your expenses and suggest to you methods of saving on taxes.  Not only that, but an accountant understands how to present business expenses to the IRS the right way, so that said reporting does not grab the unwanted attention of the IRS.  There is a high possibility that you may inadvertently write off some personal expenses as business expenses, since they can be difficult to separate.  For that, you may end up owing an explanation to the IRS.  An expert accountant ensures that your financial records are presented the correct way.

• Analyze Financial Reports

Financial reports come in handy when you are self-employed, as they give you a clear idea of your financial position.  You may be thinking that you are making good money and should switch to entrepreneurship, but your statement of cash flows, for instance, might suggest that it is not the right time for a switch yet.  An experienced accountant who has been doing tax preparation for entrepreneurs for a long time gives you good financial advice after analyzing your financial reports and comparing them against common statistics for businesses in your industry.

• Give Financial Advice

An expert CPA not only deals with finances, he or she also acts as an advisor.  After careful analysis of your transaction history, your accountant prepares a budget plan for your business.  Not only that, but your accountant helps you set key performance indicators, “KPI’s,” for your business.

You may fill out your income taxes if you have some knowledge of them.  However, the benefits outlined above that a Certified Public Accountant for freelance workers offer are hard to match on your own.