|As full-time jobs remain scarce, more people are taking freelancing positions with companies such as Uber and Airbnb, renting out their cars and spare rooms to make some extra money. While working from home, making your own hours, and never having to change out of your pajamas are all great perks to freelancing work, there are a few downsides, too. Freelance workers, for example, do not receive employment-provided insurance, nor are income taxes taken out of their pay.
Fortunately, there are options for freelancers who wish to stay on top of things like taxes and medical bills. Thanks to the Affordable Care Act, it is easier than ever for people to find health and dental insurance options that fit their needs. Many freelancers believe that they do not need dental insurance, but dental health is closely linked to overall health, so it is important to keep one’s teeth healthy. An estimated 25% of people between the ages of 20 and 44 had untreated cavities, even though they are relatively easy to treat.
Freelance workers are expected to price their services high enough to cover costs of income tax, Social Security, and Medicare, but they often need the extra money to get by. Freelance workers are able to list business expenses on their 1040 Schedule C form in order to have the cost deducted from their taxable income. This includes any fees they may have to pay to parent companies like Lyft and Kickstarter. Many services exist to help freelancers navigate their tax return forms, so they can stay out of trouble with the IRS.
While freelancing can be a great way to do what you love and get paid for it, it is important to go into any business venture with a realistic outlook. Budgeting for sick time, retirement, taxes, and insurance is an important part of any business’s bookkeeping, especially for freelancers. With adequate preparation, freelancers are able to be happy, successful business people.