Whether you’re a part-time independent contractor or growing your enterprise, you’ll need to manage your finances, and that means seeking out an accounting app. The less-expensive Essential plan offers monthly bookkeeping and a dedicated bookkeeping team while the more expensive Premium plan also offers income tax support. If you need help calculating your estimated payments, use IRS Form 1040-ES, try our income tax calculator or speak with a tax professional to get a more dialed-in estimate of what you might owe. An independent contractor is a self-employed person or small business owner who performs services for another person or entity. If that’s your situation, it’s important to know which independent contractor taxes you need to pay and how to pay them, so you won’t get a nasty surprise during tax season.

This tax rate can vary not only by state but within each state as well. This is because your company’s industry, years in business and unemployment history can all determine the percentage used to calculate the amount due. As a contractor, keeping your accounting transparent will also allow you to see your income and expenses more clearly. The clarity in financials will allow you to make smart decisions on the growth of your company. No matter how successful you feel as an independent contractor right now, it would help if you looked to the future.

Offset Long-Term Care Costs With Possible Tax Breaks

Although customer service reviews are mostly positive, some FreshBooks users report that they’ve been double charged, and customer support is not always responsive to these issues. If you’re a freelancer and want simple accounting with a focus on your needs, FreshBooks is a solid choice. If you have more than five clients, you’ll need the Plus version, but all of the plan tiers are reasonably priced. You can also add on payroll through Gusto starting at $40 per month.

• Jeremy’s work at James Moore includes audit and assurance services, due diligence support for mergers and acquisitions, cash flow forecasting, outsourced accounting services and more.
• Then, subtract $12,950 (the standard deduction for single taxpayers in 2022).
• As a partner, he also provides guidance to our accounting and assurance staff as an instructor and mentor.
• Independent personal services (a term commonly used in tax treaties) are personal services performed by an independent nonresident alien contractor as contrasted with those performed by an employee.
• While most focus generally lies on federal and state income taxes, there’s also a third aspect—payroll taxes.
• Like Bench, there is a human element to the service, but you’ll have to reach out to inDinero to get a specific quote for pricing and services.

As we’ve just determined, hiring an independent contractor shares many similarities with hiring an employee. However, just as there is a difference in the relationship, there is accountant for independent contractor a difference in the way you pay your workers. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals.

More In File

Freelancers, contract workers and self-employed people have to estimate how much they owe and pay taxes four times a year. Aside from making federal estimated income tax payments, you’ll be required to pay your state throughout the year as well. No legal test applies in every situation when deciding to classify a worker as an independent contractor. For example, the IRS and DOL use different, although similar, analytical frameworks. No bright-line test exists to determine when a worker should be classified as an employee rather than as an independent contractor. However, a wealth of information is readily available to help organizations make the necessary case-by-case determinations.