Freelance consultants run their own businesses that serve their clients. As a freelancer, independent contractor, or consultant, you have to consider a variety of tax issues, including ways to lower your tax bill. The income you receive from consulting is considered normal income. This means that you'll add it to any other income you earned during the year and then pay taxes on that amount at your marginal tax rate.
The marginal tax rate you pay at is based on what you earned. As your income increases, your marginal tax rate will also increase. Most of the time, the Internal Revenue Service recommends that you make quarterly tax payments based on your estimated tax liability. A full-service accounting firm %26 Tax Consultancy located in the heart of Brooklyn, New York, but our virtual accounting services allow us to serve clients in all 50 states.
Sales of tangible personal property are subject to New York sales tax, unless specifically exempt. While it can be complicated territory, learning to calculate and pay self-employment taxes for your consulting work is a small price to pay to have the freedom to be your own boss. For many of them, dealing with taxes on consulting fees is a headache, something that confuses and frustrates even the most knowledgeable about the numbers, along with the difficulty of some model contracts or work return templates. While being a freelancer, consultant, or independent contractor provides a new set of tax issues to consider, it also offers you many new ways to cut your tax bill.
Now that you know how to get into consulting, it's time to find out how taxes work for consultants.