smonster, I consulted with an accountant the first year just to see what I should consider deducting and she did my taxes for the first year. Then, I have basically copied what she did in the years since. I have very few legit expenses/deductions with what I do, so actually (except for ACA subsidies) my taxes are pretty simple. I liked my acct but she was pricey for my purposes.

Even though I have Money software, I find it is easier to track business stuff separately on top of that in Excel. It's just more flexible and gives me a better idea if I'm on target for taxes and makes tax prep much easier. I do a quarterly review/update throughout the year. Remember, even if you use an acct, you still have to track everything to report it to them so you need to have a good system yourself. And it also prevents you having to have receipts for every little thing. See the $75 rule at the link below.

Note, in most cases (generally unless fraud or bad debt is involved), the IRS has only 3 years to audit you. This link has good info on IRS time limits and basic record keeping: [link]

Paying quarterly is easy online, it is estimating what my income is going to be for the year that is difficult for me. I've had high tax bills and high refunds just because my income wasn't where I thought it would be. If your income is going to be variable, try to get estimates for multiple ranges from an acct so you can benchmark payments for different annual income amounts going forward. I start on the high end with the April payment and then adjust as I go. It is not a problem to have uneven quarterlies if payments are frontloaded in the year.

I've found having a separate credit card for business expenses helpful. That way all those charges can just get tagged business expense and dumped into Excel from Money (or Quicken, Mint, etc. I imagine). Also, depending on what card you get, it may be useful to pay your quarterlies with--I discovered accidentally (when cash flow forced me to charge my taxes last year) that I actually get more $$ value in Virgin airfare than the 1.85% fee they take for charging. Then I deduct the fee as a business expense.

If you like, I can send you my basic spreadsheet as a template. It has a list of basic deduction categories and what items you might consider deducting for them.

One more note re taxes for the self-employed, especially simple/small cases. If at all possible, avoid depreciation. It requires extra forms and then you are stuck with that system for (usually) five years. I think tax preparers often default to it since it makes taxes look more complicated than they have to be and many charge by the form.

In my case, if I use a preparer, taking depreciation costs me more than not taking it since the actual tax benefit is less than cost of the extra form. Ridiculous.

Basically, if you are profitable and qualify for a home office, the full purchase price of most items you might depreciate (laptop, printer, software) can be deducted in one pop on your Schedule C via the Section 179 deduction. This page has a good summary of the relevant info: [link]

If at all possible, avoid depreciation. It requires extra forms and then you are stuck with that system for (usually) five years. I think tax preparers often default to it since it makes taxes look more complicated than they have to be and many charge by the form.

The depreciation this is tricky. It's actually changed a few things over the past few years. I believe for 2015 the cutoff is items over $3000, but in 2014 the IRS set the limit at $500 which was crazy. This is part of the reason I say to use a CPA, the rules are such a moving target that what was good one year may not be the next.

The tricky thing about the audit rule is that they can choose to look at things up to 3 years old, but as part of that audit they can look for supporting facts easier that year. There is also no limit if they suspect fraud.

Yeah, Section 179 can be a moving target, but it's handy if you only have to buy a couple things every few years. I couldn't use it when I first started out using stuff I already owned, so I don't fault my accountant, but I was a bit annoyed when I realized later that taking depreciation that year probably cost me.

One thing I really like about initially using the accountant is just finding a comfortable level of what and how much I was deducting. Between that and my income level (and studying govt spreadsheets to learn the incredibly high income %age that many self-employed people deduct as "expenses"), I know my audit risk is pretty low. Not that I'd have a problem in an audit, but it's obviously a nuisance I don't need.

You also have financial training, Megan, so I think your comfort level doing things on your own is much higher than mine. Even when ND was just freelancing, I relied on our accountant.

You also have financial training, Megan, so I think your comfort level doing things on your own is much higher than mine.

TBH, reading all that was kind of overwhelming. But I'm also worried about how much an accountant will cost me. Bleh. I was in a great mood earlier today, feeling like I could take on the world, but I feel very different now (unrelated to this thread - just had a weird mood swing).

Still appreciating all the input, though.

For sure, if they weren't so expensive up here, it'd be a no-brainer just for the convenience. Like with health insurance, living in SF proper always seems to add a few hundred $$ to the bill.

TBH, reading all that was kind of overwhelming.

At this point, just know two things:
1) make quarterly estimates
2) if you buy/do something that is in any way related to income coming in, keep the receipt

If you want to talk actual income figures or ACA subsidies info, feel free to call or text.

My suspicion is if you ask around you can get a recommendation for a good CPA that won't break the bank. I've got an awesome one in LA and when I started with my CPA it was $250 if my memory is correct. I'm still only at $700 for the corporate and personal taxes combined, and they are no longer simple.

Even if the cost of the CPA sounds high, a good one will find things that you'd probably miss and pay for themselves that way. Also, it can take a huge amount of stress off of you. Knowing that I've got a CPA that I trust and that can answer my silly questions takes so much stress off of my regarding taxes. I have two theater degrees and no business training. I do well at it, but there are parts that really stress me out and knowing that I have an expert is a HUGE part of being able to do it.

At this point, just know two things:

1) make quarterly estimates

2) if you buy/do something that is in any way related to income coming in, keep the receipt

This is basically what I do, and it's all good. Possibly not having an accountant will come back to bite me in the ass t marks this post for reference when the audit hammer comes down but I honestly don't feel too fussed about not having one. I've been freelancing for almost 3 years now, and it's been fine. The first year was the hardest because it was all unknown and weird, but with the first year of tax returns under my belt, doing my returns this year was a piece of cake. The only annoying part was remembering to do a return for the city of Cincinnati (when you work for The Man, if 2.1% is deducted from your paycheck for city taxes, you don't have to file a city return, so I was long in the habit of not doing a city return).