The Reasons Why Every Independent Contractor Needs an Accountant

Independent contractors work for themselves and are not considered employees of the clients that they do the work for. As a result, they may have tricky income tax situations due to the lack of regular withholding from their earnings.

Three Ways That Independent Contractors Benefit from Professional Accounting Services

As the staffing needs of corporations change, many people find themselves working as independent contractors. An independent contractor may work for one business in a year or dozens of businesses. Each of the clients that an independent contractor works for will provide a 1099 for income tax purposes. In order to ensure that all taxes are handled correctly, a Henderson CPA helps independent contractors to file their tax returns and make plans for special withholding needs.

Tax Return Preparation

An independent contractor who works for many different clients in a calendar year may find that he or she has a large pile of 1099 forms. Preparing taxes with income as an independent contractor can be a challenge, as there are additional forms that need to be completed. The CPA can help you to sort through your tax related paperwork and make sure that all of the necessary information is put into the right places on your annual tax returns.

Tax Withholding

A common problem for independent contractors is that no income taxes, FICA or other deductions are withheld from their earnings. This can lead to an unpleasant surprise when the taxes are filed, as a large sum of money may be due to the federal or state government. A CPA can help independent contractors to estimate their earnings and make quarterly prepayments on their expected income. This may help an independent contractor to avoid penalties on future tax returns.

Determining Eligible Deductions

A CPA can also help an independent contractor to determine which tax deductions they can use. For example, an independent contractor working out of his or her own home may be able to deduct some of their expenses such as the cost of Wi-Fi internet, the purchase of a printer or for office supplies such as paper and envelopes that are related to the work that the contractor performs.