Listener Question- “Hi Shannah, I left a salary job last year to become self-employed and am having a hard time staying on budget without taxes coming out of my paycheck each week and even getting a paycheck each week for that matter. How can I budget?”
In today’s podcast I dive deep into this listener question offer a few tips to help with the self-employment paycheck woes.
1. Know your tax rate from last year– take a look at your tax return from last year to figure out your tax rate. Then, ask yourself, “Am I going to make more money this year or less?” That will decide the percentage you need to pay in estimated taxes. You must pay estimated taxes quarterly to avoid a penalty if you are self-employed. Also, get yourself a good CPA.
2. Budget- An excel budget just won’t do the trick when you are self- employed. You can spend way too much time using an excel budget, when a program can do the accounting for you. My favs are Quicken, Microsoft Money and iBank5 for Mac users.
Check out my How to Budget in 20 Min a Month video to get my budget template that I use with the software above.
3. Minimize Taxes- Business deductions are your friend if you are self-employed. This is why it is so important to track EVERY single one of your expenses. Other things to think about are an IRA, SEP-IRA (you can put a higher number in this retirement account) or a Health Savings Account.
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