Greatest Hits
- (L)Earning What I'm Worth
- The Save-to-Spend Budget
- Salary Negotiation Post - Retraction
- Money Types: Carrie, Samantha, Miranda or Charlotte?
- How Jenny Earned $15,000 on eBay
- The Fashionomics of Retail Begging
- Create Other Income Streams
- Challenge: Wear Just Six Things
- Rx for a Bloated Budget
- Stop Wasting Time on Things That Will Never Make You Money
- End the Superwoman Syndrome
- The High Cost of Part-Time Work (+ working mom poll)
- Smash Student Loan Debt
- Prep for More Pay
- Personal Account: My Brain on Sales
- On Becoming a Financial Grown-up
- Pop Quiz from DailyWorth!
- Bouncing Back From Bankruptcy
- Personal Account: Gabrielle's Reflection on Worth
- To Coupon or Not?
Tax-Saving Secrets of the Self-Employed
By MP Dunleavey Friday May 21, 2010
Nickels, dimes, quarters If you're self-employed, the not-quite quarterly tax payment deadlines can be a pain (Jan. 15, April 15, June 15, Sept. 15, what?).
You need a surefire system to keep your tax savings on track—so you don't end up owing penalties. Advice from our readers:
Make life less taxing
- Kat Halsey, an L.A. artist, started taking credit card payments through ProPay about a year ago. "Those charges go straight to an online account, and that it has become my savings for both my taxes and my sales tax fees. Though I'm not earning interest, this system keeps my tax money separate from my business account—which prevents me from spending it." Exactly.
- Sharon Mathis, a digital photo retoucher in NYC and Philadelphia, socks away 30% of each payment into a designated tax account. "Thirty percent plays it safe, and I usually have money left over." She also asked one client, who pays via direct deposit, to automatically deposit 30% of each check into that tax account for her. And they did. Sweet.
- Suzanne Grossman, who teaches Love Your Job Search classes in New York, has a two-part system: She set up a separate ING account for taxes, and then linked her PayPal account, where she accepts class fees, to the ING account. "Then I just transfer 20 percent of my revenue to ING. It's online, it's done and I never have to think about it." (Percentages vary, so check with your accountant.)
Tell us that you've set up at least one automatic transfer—for taxes, retirement or general savings—since you started reading DailyWorth and we'll take the weekend off.
Comments
(12)
Subscribe to this comment's feed
Written by Katie, May 21, 2010
Finally opened up by Roth 401k and upped my contributions to get the full company match - thanks for the daily reminder to play responsible!
Written by Patti, May 21, 2010
My tax bite is 49 percent so, yes, I have to have separate account to make sure that money is saved. This one is especially tough, though, because I just made a payment in April! I will probably skimp a little and make up for it in the next payment. My biggest income months tend to be September and October, so I can get a way with making a slightly larger payment in the fall. I do wonder sometimes if it's worth it to work so hard and have to pay so much in taxes...
Written by Meghann, May 21, 2010
I use the money paid into my PayPal account to pay for taxes for my jewelry business, and for my consulting business I automatically put 20-30% of my regular pay into a savings account for taxes, and 30% of any commission checks I get also go in there. I don't touch it, it earns a small (pitiful, really, but better than nothing) amount of interest, and there it stays until tax time. I usually have leftovers, which I designate 50% to long term savings, and 50% to a 'treat day' - getting my hair done, or buying a good book (or 10!) :)
Written by Isette, May 21, 2010
I love propay, and use it for much the same purpose. I also take all checks I receive and put them in a different account than my regular one. It keeps it separate and is handy for emergency funds!
Written by Mallory - Miss Malaprop, May 21, 2010
Okay, Kat's business idea is the coolest ever!
I actually just recently set up two new ING Direct accounts, one for sales tax savings and one for income tax savings.
I actually just recently set up two new ING Direct accounts, one for sales tax savings and one for income tax savings.
Written by Diana, May 21, 2010
I set up a new biweekly automatic savings account deposit and also upped my 401K withholding to the company match. Feeling very prepared and productive :)
Written by Robin, May 21, 2010
I didn't start a new transfer after reading DailyWorth, but I increased two -- does that count? :-) I increased the amount I direct deposit into a savings account, and I also increased my 401(k) contribution to the maximum that my company matches.
Written by Meret, May 21, 2010
I just re-started a regular transfer for saving after starting reading DailyWorth. But right now, I thinking about to increase it for saving, taxes and "worstcase". thanks for all the good ideas you give me daily!
Written by Frances, May 21, 2010
Daily Worth, how do I value thee? Let me count the ways...
1) Thanks to the "SAVE UP!" post (and the pledges I made then), I have set up automatic transfers to my emergency fund and my regular savings account. I had zero savings before 6 months ago.
2) I completely paid off my non-student-loan debt ($5000 at 10% interest, eek!). A few posts on bulking up savings vs closing out debts were really helpful.
3) I have little pictures of my dream car above my desk and in my bedroom with the words "this is worth more to me than meals out or pretty things" (in the spirit of the pledge).
4) I finally signed up for mint.com, and I force myself to check it weekly. It's shocking how a little laziness (I'm too tired to cook tonight, I'll just pick up something on the way home) becomes a habitual waste of $200-ish dollars a month. Last year I was living on $10 a day for 3 months (my strict budget) and I kept to it, but as soon as I landed my current job, I revelled in the financial freedom and it took a serious DW kick in the pants to rein me in.
5) Oh, and now I have a retirement account too (a 401k). It's modest, but this year I aim to max the tax-free contributions out.
6) I'm even getting to the stage where I'm considering "real" investing.
=== in conclusion ===
I think you've earned at least a weekend off for the positive changes you've brought into my life. I'm not as good with money as I want/need to be, but I'm better than I used to be 6 months ago. I'm way more likely to open those bills than to stick my head in the sand and, um, ignore them (see, I HAVE come a long way!)
1) Thanks to the "SAVE UP!" post (and the pledges I made then), I have set up automatic transfers to my emergency fund and my regular savings account. I had zero savings before 6 months ago.
2) I completely paid off my non-student-loan debt ($5000 at 10% interest, eek!). A few posts on bulking up savings vs closing out debts were really helpful.
3) I have little pictures of my dream car above my desk and in my bedroom with the words "this is worth more to me than meals out or pretty things" (in the spirit of the pledge).
4) I finally signed up for mint.com, and I force myself to check it weekly. It's shocking how a little laziness (I'm too tired to cook tonight, I'll just pick up something on the way home) becomes a habitual waste of $200-ish dollars a month. Last year I was living on $10 a day for 3 months (my strict budget) and I kept to it, but as soon as I landed my current job, I revelled in the financial freedom and it took a serious DW kick in the pants to rein me in.
5) Oh, and now I have a retirement account too (a 401k). It's modest, but this year I aim to max the tax-free contributions out.
6) I'm even getting to the stage where I'm considering "real" investing.
=== in conclusion ===
I think you've earned at least a weekend off for the positive changes you've brought into my life. I'm not as good with money as I want/need to be, but I'm better than I used to be 6 months ago. I'm way more likely to open those bills than to stick my head in the sand and, um, ignore them (see, I HAVE come a long way!)
Written by Amanda (DailyWorth Founder), May 23, 2010
Frances - THAT'S AMAZING! I just emailed your comment to the DailyWorth team/our extended network of supporters. This is the kind of proof that makes our hearts sing -- and shows that DailyWorth is far more than just another email. Kudos to you for doing the work. You are an inspiration to us all.
