Tempted to make a little cash driving for Uber or Lyft, or renting out a room through Airbnb? Or have you built a business using other skills?
Then welcome to the gig economy, in which you can be your own boss, and, depending upon what you do, build your own business. But as with any small business, risks go along with the rewards.
And one of those risks is failing to account for taxes. That risk appears to be growing as more freelancers flood into the gig economy. USA Today reports:
Public awareness of relevant tax issues appears to be lagging. In a survey last year of members of the National Association of the Self-Employed, slightly more than one in three respondents said they didn’t know they needed to file quarterly estimated tax payments and didn’t know what records they needed to keep. Four in 10 respondents weren’t setting aside money for taxes.
“Many of the new service providers in a sharing economy may not fully comprehend their tax-filing obligations or have any experience with the requisite tax record-keeping,” wrote Nina Olson, the National Taxpayer Advocate, in a report to Congress. Many of these people “will need to spend significant time learning about their tax-compliance obligations and devote many hours to record-keeping,” she said.
The IRS has launched an online resource to help small business owners including those involved in the gig economy navigate sometimes complicated tax issues. The Small Business and Self-Employed Tax Center offers a variety of tools to help with taxes.
Here’s the press release:
The Center features relevant tax forms and instructions for small businesses. It serves as a resource on how to handle employment taxes, if employees are part of a business, or figuring out self-employment taxes for the sole proprietor. The section on filing and paying business taxes details which IRS forms to use for what sort of business entity and when to file.
The resources on Small Business and Self-Employed Tax Center are not just for new small businesses but can be used for every stage of a small business lifecycle; from starting up and operating a business to selling or closing one. In addition, the page has information on topics like recordkeeping, types of retirement plans and the Affordable Care Act.
In addition to checking out resources like the Small Business and Self-Employed Tax Center, you may need professional help. Sterling Accounting can help with all aspects of business bookkeeping and tax preparation.