Freelancer Finances: Navigating Tax Withholding

When it comes to taxes, freelancers are especially prone to making mistakes that can put them at financial risk.
by Bethany Frank

If you don’t consider yourself very financially-savvy, you’re not alone. The lack of financial literacy among teens and adults in the U.S. is so severe, the government recently called for colleges and universities to begin administering mandatory financial literacy education to incoming students.

Research shows that nearly two-thirds of Americans can’t pass a basic test of financial literacy. This isn’t something for people to embarrassed about, but it’s a statistic to take to heart: we need to start educating ourselves about our finances and make better decisions on our own, because corporate America and the financial system as it exists today aren’t going to help us.

When it comes to taxes, freelancers are especially prone to making mistakes that can put them at financial risk. For many people, paying taxes is pretty much on autopilot – anyone who receives a W2 from an employer can rest assured that they’ve already paid their dues through the appropriate withholdings from their paycheck throughout the previous year.

Freelancers who get paid on a cash-basis, however, don’t automatically pay taxes on their income upfront. As obvious as it may seem, many freelancers don’t even realize they’ll have to pay taxes on their income until someone with more financial expertise points it out, or until the first time they file their taxes upon becoming self-employed. Many freelancers who don’t realize they’ll be taxed later may fail to incorporate the expense into their rates, making a bill from Uncle Sam more difficult to manage in the long-run.

Namu is a personal finance app designed to help freelancers collaborate with clients and manage their finances. The app offers practical advice along the way to help freelancers stay in control of their finances and make more education decisions. It equips freelancers with all the tools needed to manage invoices, payments, and bookkeeping without any added confusion. With Namu, you can quickly generate and send invoices, request and receive payments, and set aside withholdings all in one easy-to-use app.

You don’t need to be a finance expert to go into business for yourself. Namu empowers freelancers with everything needed to stay organized and build wealth—like having a personal accountant in your pocket. With Namu’s support, freelancers can feel confident about their finances and concentrate on the work they love.