Here's a quick little blog post from Freelance Switch on the importance of saving for taxes now that you are an independent contractor.
Read it and weep

How do you handle your own business tax burden as a freelancer each year?

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What a fabulous article!! A must read!

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Winslow Girl Virtual Assistant
www.winslowgirlva.com
Taking Virtual Assistance to the Next Level

Hmm - interesting article. Thanks for posting!!

Tess, I have a few useful resources for up here in canada and for those who live in BC.

If you want those links - let me know!

Yvonne

Thanks, Tess! I always encourage all of our subcontractors and potential clients as well as other VAs to put aside 30% for taxes. Of course, for LLCs, the 30% is taxed on the NET income and must be deposited quarterly to the IRS (this info is in the LLC basics). This is partly why I encourage VAs to form a company. Subcontractors/individuals pay 30% on ALL income not just net.

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Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"

Saving has always been hard for me but then I opened up an internet savings account at ingdirect.com (there are several others out there) and it has been a life-saver. It makes the money not-so-readily accessible, it takes about 3 days to withdraw the money by having it transferred to my linked account, so I can't just withdraw it on a whim. Plus, I get 4.5% interest which is much higher than any regular savings or money market account.

ING does offer an ATM Card now, but I don't have one. I like that I can't access the money immediately, because that's what helps me save. I truly love my ING account. You can now get high-interest checking accounts through them too, but I haven't tried it.

If anybody is thinking about opening one, send me your email so I can send you a referral link and they'll give us both $10.

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Rebecka Melson ~ Virtual Business Services

Rebecka, we're considering ING for our business account as well once we get to the States. The company was written up in a book I recently read and I was so blown away and truly impressed with the company philosophy on money and customer interaction it made me want to do business with them. I'll be sure to get the referral link from you when we're ready to set it up - thanks!

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Originally Posted by CYMMTJ

Hmm - interesting article. Thanks for posting!! Tess, I have a few useful resources for up here in canada and for those who live in BC. If you want those links - let me know! Yvonne

Yvonne, that would be wonderful
Feel free to create a thread in whichever section you think they most apply to and note in the title they are relative to Canada. I'll check them out and post what I can to our directory as well.

Thanks!

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How do you know how much to save seeing a your taxes aren't calculated until the end of the period and you won't know in adcvance how much you would have earnt

The general rule (which I've learned from Lily and Rebecka, our tax and bookkeeping gurus ) is 30% all the way around. So, 30% monthly seems to be a good rule of thumb.

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30% of your net income, not your gross. Luckily for small business owners we get a lot of deductions to reduce our taxable income.

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Rebecka Melson ~ Virtual Business Services