More of us than ever are working gigs, meaning paychecks don’t come in at a regular cadence or amount. There are two ways of looking at this: First, if you’ve been in the freelance game for a while, and have the flexibility to do so, take a look at raising your rates.
“The new year marks the perfect time to increase your rate and in turn maximize your retirement savings,” says Corbin Blackwell, CFP and senior financial planner at investing platform Betterment, “and it’s crucial to factor money taken out for retirement into your rates.”
Secondly, if you’re in the early stages of a gig or freelance career, this is a good time to think about how you might raise your rates as your business grows. For those on fixed gig rates (or those who don’t control their own rates), you can look at your overall expenditures in your job and see what can be pared down to increase your bottom line.
If business is good and you’re making over a certain amount, your single most important step could be to find the right accountant.
“A good accounting firm can help an entrepreneur choose the optimal tax entity structure for their business (S-Corp, C-Corp, or partnership), says Donald Williams, owner of Williams Accounting & Consulting in Atlanta and New Orleans. “(The firm can also) analyze an entrepreneur’s potential tax liability and then advise the entrepreneur as to which tax entity will minimize taxes, enabling the entrepreneur to improve their finances in 2022.”
Instead of looking at it as an annoying expense, think about it as if you’ve reached a goal: you’re a successful freelancer/gig worker, and now you can take the next step to protect yourself when tax time comes around.
Askman.com
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