Take Charge of Quarterly Estimated Tax Payments with Outright
Image by ClawzCTR via Flickr
One of the things I’ve had the hardest time figuring out since my freelance writing began producing a significant income was how to manage my estimated quarterly tax payments. For the time being, I’ve been over-paying my taxes at my day job and hoping that it was enough to cover the taxes I wasn’t paying on my freelance income. Last year my overpaid taxes just barely covered my freelance taxes – assuming my income keeps climbing at the rate it is (and especially once I start scaling back my day job) this jury-rigged system isn’t going to work for much longer.
Enter Outright, a free online service to help freelancers manage their taxes. Using Outright is fairly simple – you just enter in your income as it comes in, and your expenses as they go out. Around the end of each quarter, Outright sends you a reminder saying your upcoming taxes are about due, and figures them out for you (including Social Security – both employee’s and employer’s contributions) and Medicare). Where several methods exist to figure out your taxes, Outright uses the one that requires the highest payment, on the principle that its better to overpay a little now and get it back at the end of the text year than to underpay and get hit with fees.
[NOTE: Outright is designed for the US tax system and, as of right now, does not support non-US taxpayers.]
What makes Outright really shine, though, is its integration with other services. On the “income” side, Outright integrates with online bookkeeping system FreshBooks, importing paid invoices every night and updating your tax estimate. On the “expenses” side, you can track receipts using Shoeboxed, an online system that allows you to scan receipts into the system so you can dispose of hard copy (paid versions even allow you to mail your receipts in and have them scanned for you).
Altogether, Outright, FreshBooks, and Shoeboxed create a full accounting system freelancers – particularly at low- and mid-range incomes. Outright scales pretty well, though – as your tax needs get more complex and demand the attention of a bookkeeper or accountant, you can easily give them access – a couple clicks and the system sends an email with a link to set up third-party access to your books.
With a system like this, there’s no longer any excuse to avoid paying your quarterly estimated tax payments. Entry-level versions of FreshBooks and Shoeboxed are free, as is Outright – why not set them all up and give it a try?