6 Helpful Tax Tips

If you work full-time as a contractor for street sweeping or paving, you’re probably well aware of the benefits that come with contract work. It allows you a sense of freedom that other employees don’t get with their work. However, we understand that while there are lots of benefits that come with being a contractor, it can also get a little stressful when it’s that time of year for taxes. If filing your taxes leaves you more anxious than anything else, read on for six helpful tax tips to get you on the right track!

1. Report All of Your Income

Working as a contractor can result in receiving several 1099-MISC forms every year if you work a lot of separate jobs. However, there might be an instance where you didn’t receive a 1099 because the total payment you received was under $600. If that’s the case, remember that you’re still required to report all of your income. Better safe than sorry!

2. Confirm What to File Under

If you’re an independent contractor, you probably file under Schedule C as part of your Form 1040 return each year. But if you find that you’ve had a slower year than usual, you might be able to file with Schedule C-EZ, which is a more straightforward process. Qualifications include using cash rather than accounting and not having inventory or business expenses that are under $5,000.

3. Get Financial Software

If you’re not keen on hiring a professional to do your taxes, but you’re also a little clueless when it comes to bookkeeping, consider trying some online financial software for a simpler tax filing process. Not only will this help with filing taxes every year, but it can also offer a method of tracking billing and invoices for clients. If you want, you can even access financial reports to help with your sales and marketing. Essentially, these programs will give you a more efficient way to track your income and even file your taxes straight from the software.

4. Take Advantage of Travel Expenses

As an independent contractor, one of the biggest benefits is that you have the ability to write off any of your business travel expenses on your taxes. Business-only trips can be entirely deducted, but remember that any personal travel needs to be removed from that amount.

5. Take a Look at Your Health Insurance

Something a lot of independent contractors might not know is that you can deduct all of your health premiums without actually itemizing them. This means that your gross income will be reduced because you can take an above-the-line adjustment to your health insurance premiums. What’s more, you can even deduct the costs of your dependents’ health insurance premiums as well.

6. Get a Retirement Fund

Because you might not have an employer who can set up a plan for retirement for you, it’s your responsibility to take a portion of your income and set it aside for when you plan on retiring in the future. However, that doesn’t necessarily mean you can’t get something out of tax season when it comes around! If you’re a self-employed independent contractor, you can take your net earnings and contribute over 20 percent of it into a Simplified Employee Pension IRA.

These SEP plans can help provide a significant source of income when you retire by allowing you to set aside a portion of your income into retirement accounts. Bonus: it doesn’t cost as much as a conventional retirement plan to set up and operate!

Ease Your Mind by Applying These Helpful Tax Tips

It takes a lot of effort to learn how to run your business, and you aren’t alone if handling your taxes as an independent contractor is stressful. That’s why it helps to learn easy tips throughout the process that can ease your mind and help you focus on your work. We hope this advice can help keep your head on straight in time for tax season!

Benefit from more helpful tips to grow your street sweeping or paving business by checking out the North American Sweeper Magazine today.



No comments yet... Be the first to leave a reply!