One thing many freelancers don’t account for is there taxes.
Nearly all freelancers have held a “regular” job before they started freelancing and so they assume that the tax rates will be the same as a freelancer as they were when you were an employee (I know I thought this.)
However, as a freelancer, even though you are now your own boss, you’re still your own employee.
This amounts to a lot of additional taxes that you need to be prepared for.
Freelancers Union has put together a great post that helps explain taxes for freelancers and breaks each tax down so you will know exactly what to expect.
“Surprise! Being your own boss means you’re on the hook for additional taxes.
When you don’t work for “the man”, so to speak, you have to make up the portion of Federal Insurance Contributions Act (FICA) taxes that is paid by employers on behalf of their employees for Social Security and Medicare.
This is a little known fact for an astounding number of freelancers. You’re not responsible for just one tax, either.
Self-employed individuals making more than $400 per year are treated to the following trifecta of taxes by the IRS.”
Read the full post at Freelancers Union.