9 smart pieces of advice accountants give freelancers and creatives to make tax season easier

• Freelancers and small business owners are smart to look ahead and get their accounting in shape well before Tax Day 2020.
• To make filing taxes easier, accountants recommend building smart bookkeeping practices into your everyday processes, and putting aside money for taxes sooner rather than later.
• This post has been reviewed for accuracy by Thomas C. Corley, CPA.
• Read more personal finance coverage.

Managing finances and taxes comes with a learning curve for just about anyone, and freelancing seems to come with its own set of rules. From navigating quarterly tax estimates to setting up an LLC, there's a lot to think about when you set out to work for yourself.

If you're new to the freelancing world or you're just looking for some expert tips on improving your financial well-being come tax season, we asked accountants for the best tax advice they can give freelancers to make life a little easier.

1. Use a simple spreadsheet for bookkeeping

If the process of bookkeeping feels so burdensome that you avoid it until the end of the year, try using a simple spreadsheet system instead. "A simple spreadsheet detailing your monthly income and expenses is perfect for freelancers," says CPA Alexis Krystina of Advance Accounting. "This gives you all the information you need as a business owner to understand the health of your company, it makes filing taxes a breeze, and the best part - it's easy to maintain."

2. Create standard operating procedures for bookkeeping

Without specific procedures to update your bookkeeping every month, you'll not only be overwhelmed when tax season comes - you may have to pay more taxes. "Treat your accounting procedures the same way that you do with your sales or marketing procedures, and stay consistent with it," says Krystina. "Write down your processes, and pick a day every month to perform the tasks."

3. Create a system for managing receipts

Since many purchases are tax-deductible, it's important to keep track of your receipts. But managing all your expenses amidst the daily chaos of running a business isn't necessarily easy. CPA Pete McPherson recommends choosing an expense or accounting tool that also offers a smartphone app (such as Freshbooks, Quickbooks, or Wave) where you can quickly snap photos of receipts when you receive them. You can also create a dedicated folder in your email inbox where you forward electronic receipts. Then, once a month, forward these emails to your accounting software.

"Creating these small systems can save you hours in the long run, and make it much more seamless if you do simply hand over your finances to your CPA," says McPherson.

4. Plan for your retirement

Just because you're self-employed doesn't mean you shouldn't invest in your future.

Your pathway might be less clear cut than a W-2 worker with ready access to a 401(k) or other employer-provided plan, but freelancers still have the ability to set aside money in tax-advantaged ways, according to CPA Riley Adams.

"One route available to anyone with earned income is the individual retirement account. In 2019, a person may contribute up to $6,000 of their earned income," Adams says. "This account can be either a traditional IRA with tax-deferred income placed into an account and taxes levied on the capital gains when sold in retirement or a Roth IRA where taxes are paid upfront and the contributions grow tax-free."

If you're age 50 or older, you are eligible to contribute $7,000 a year, or an additional $1,000, to an IRA.

5. Set aside self-employment taxes in a separate account

Brendan Willman, a CPA with Granada Tax, says self-employment taxes are the biggest surprise for new freelancers. Freelancers pay 15.3% on the first $132,900 to cover their Social Security and Medicare taxes. "A portion of the taxes is deductible, so I recommend that freelancers set aside 10% of their net income (gross income minus profit margin) in a separate account to ensure they always have enough in reserve to pay their self-employment taxes on a quarterly basis."

A good place to keep the money you set aside for self-employment taxes could be a high-yield savings account, which is just as liquid as a regular savings account but earns up to 2% interest on your savings.

6. Budget for federal, state, and local income taxes

Since your taxes won't be automatically deducted from your paychecks, make a priority of budgeting for what you'll owe. Willmann recommends calculating the percentage of all taxes due, multiplying the aggregate percentage by your expected net income, and setting aside that amount along with your self-employment taxes in a separate account.

7. Pay yourself periodically from a separate business account

Once you have an adequate amount set aside for taxes, distribute funds from your business checking account to your personal account on a periodic basis. "Freelancers often struggle with adjusting to volatile income, but if distributions to your personal checking account are a set amount and done at regular intervals, your personal finances may be largely unaffected," says Willmann.

8. Get a business credit card

As a freelancer you want to maximize earnings by spending as many hours as possible on billable activities, and minimizing unbillable administrative work. "Having a separate credit card for all your business expenses will make it far simpler to isolate and identify all your business expenses, not only for your own profitability analysis, but for taking deductions at tax time," says CPA Abir Syed.

See Business Insider's picks for the best small business credit cards »

9. Use a time-tracking software

Even if you mostly work on fixed price projects (rather than billable hours), Syed suggests using a seamless time-tracking software like Clockify.me, which can easily show you how much time different types of projects take. It will also allow you to isolate the time you spend on areas like administrative tasks, client communication, or business development.

"The more precise this data, the better, because you may think a particular type of project may seem more profitable until you realize how much additional client communication it requires, or how much more time you have to spend to acquire that business," says Syed. "Having a more granular sense of your profitability, rather than just looking at it overall, can help you focus your time where you'll get the most bank for your buck."

• More tax day coverage:
• When are taxes due?
• How to file taxes for 2019
• What is a tax credit?
• H&R Block vs. TurboTax

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