robertman11
Level 3
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Once you start to earn enough money freelancing online, you'll have to start paying quarterly taxes (in the USA). I read a book that suggested opening a separate bank account for taxes only (the book was Profit First by Mike Michalowicz). You store all of your tax money in there and make your payments out of it to the IRS/state. It seemed like a good idea but do you really even need a separate account for this? Wouldn't it be better to pay your taxes monthly or as you receive them (even weekly)? That way you would never have a tax debt.
Is it possible to pay them monthly or even weekly vs. quarterly?
Drake83
I also believe the Profit First book recommended paying quarterly, not every month. I'd suggest setting up a savings account (you may already have one) and putting the funds in there monthly. This would allow you to collect the interest on the money instead of sending it off to the IRS who is probably collecting interest on any money you send.
Additionally, something may change in your business. You could be "out of business" after the first month of a new quarter and already sent that money to the IRS but your total income for the year would be much less meaning you owe less taxes. You'd have to wait until the end of the tax season to get that refunded. Yes, you can. I'd suggest using the [url=https://www.eftps.gov]EFTPS[/url] and saving a copy of every transfer/deposit so that the funds are recorded. The IRS is notorious for "messing" up and claiming you didn't pay anything (as this could confuse them since it isn't the norm). I also believe the [i]Profit First[/i] book recommended paying quarterly, not every month. I'd suggest setting up a savings account (you may already have one) and putting the funds in there monthly. This would allow you to collect the interest on the money instead of sending it off to the IRS who is probably collecting interest on any money you send. Additionally, something may change in your business. You could be "out of business" after the first month of a new quarter and already sent that money to the IRS but your total income for the year would be much less meaning you owe less taxes. You'd have to wait until the end of the tax season to get that refunded.
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