Let’s say that your dream is to become a freelance photographer that specializes in weddings. Now, let’s go even further and say that you have actually been able to accomplish your dream and you have had several years of relative success. Now one morning as you flip through your mail you come across a thick white envelope with the phrase “Internal Revenue Service” clearly labelled on the top half of the envelope. You open it up and all thoughts of a happy morning immediately fly out the window while you read that you are about to be audited due to audit red flags in your tax return.
Common Occurrence
Believe it or not, the situation that was shown above is actually quite common in various areas in Los Angeles, CA, as well as in other cities in the U.S. Based on recent studies by the IRS, one of the largest segments of the U.S. population that submitted erroneous or suspicious tax filings were freelancers. This is not to say that freelancers were intentionally submitting fraudulent paperwork; rather, the reason behind this is simply because some of them simply do not know how to properly prepare taxes – which results in the mess they wind up in.
The Need for Tax and Accounting Services
What some freelancers fail to take into consideration is that they are in effect running a business. While it does not have a store or extensive employees, it is still considered a business by the government and, as such, they do have a claim on a percentage of your revenue. Thus, filing taxes is more than just about inputting income and calling it a day. It delves into the cost of service, amounts paid to suppliers, total revenues after deductions, etc. It is due to the sheer amount of information involved that going to an accountant for their tax and accounting services is the best method of sorting through all of it and filing your taxes correctly. The alternative is learning to do it yourself which can take a considerable amount of time and effort which you simply do not have .
Overall, hiring an accountant to assist you simply makes good business sense since it allows you to focus more on your freelancing career without worrying if you properly filled out a form or accidentally placed a wrong decimal point.
