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Ten Tax Tips for Virtual Assistants

Virtual assistants are independent contractors, which means they have to handle their own taxes. This may seem like a daunting task but it’s not too difficult if you’re organized. Here are a few tax tips for virtual assistants.

1. Keep all of your receipts. As a virtual assistant working from home, there is a good chance you will have a few deductions when you do your taxes. Don’t throw away any receipts for any business-related expenses.

2. Document everything. You should always make sure anything related to the exchange of money is documented. Get everything in writing and keep meticulous records of all the money spent and earned through your business.

3. Use software. It is a good idea to use software to track all of your financial transactions related to business. Quicken and other personal finance software can help avoid accounting headaches and keep running totals handy.

4. Take advantage of home office tax deductions. If you work from home, you may be eligible for a home office tax deduction. You can deduct expenses such as office furniture and your computer if they are used for your business.

5. Obtain an EIN. An EIN, or employee identification number, serves the same purpose as your social security number when it comes to filing taxes. Apply for an EIN from the IRS’s webpage to avoid having your social security number fall into the wrong hands when dealing with multiple clients.

6. Form an LLC. Many virtual assistants prefer to keep their business affairs separate. Forming a limited liability company for tax purposes often has financial benefits.

7. Set aside money. Independent contractors don’t pay taxes until the end of the tax year. This can result in an unpleasant surprise once your taxes are calculated. To avoid taking a heavy hit, set aside approximately twenty percent of your earnings in a separate account where you can’t touch it.

8. Report everything. Some jobs, especially small ones, will be paid through Paypal. Clients might not bother sending 1099s for smaller jobs. Resist the temptation to leave these jobs off of your tax return. You are obligated to report everything and if you or your client receives an audit, any money transfers including those through Paypal can easily be traced.

9. Hire an accountant. It is usually a good idea to hire an accountant to help you with your taxes when you are self-employed. Even though this costs money, many VAs find that the money saved on deductions found by their accountant exceed the accountant’s fee.

10. Consider taxes when setting your fees. When deciding upon the fees you will charge as a VA, don’t forget that you will end up paying around one-third of the money in taxes. Always add on a little extra above what you want to keep for yourself.

About Stephanie Watson

Mom | Wife | Virtual Assistant | Content Strategist
Stephanie has been working from home for over 20 years as a virtual assistant, template bender, and content writer. She's currently transitioning to business coach. You can learn more about her at her website http://www.barrypublishing.com.

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