I'm a college student who's gotten their first client. I've got a contract in place, and everything's going swimmingly. Like the title said, at what point should I start to worry about taxable income?
Not to sound snobby, but have you never worked a day in your life? You should always be worried about taxes.
I've never done paid work — only unpaid internships in science laboratories. Hence this question.
EDIT: I responded before I saw your edit. A better phrasing of the question would've been how I should handle taxes as a first-time freelancer.
Fair enough. I didn't want to insult you with the comment. It's unfortunate you've only had unpaid internships. They are so evil, but at least you have experience. That's the important part.
No worries, you didn't insult me! The internship got me into university, and it was a great learning experience — turns out, I don't like biology! I'd much rather do CS and design.
A very simple rule that I learned when making the step from freelancer to running an agency, was this:
Every time you receive some money from a client, put a percentage (10%?) into a savings account and don't touch it until tax day.
Don't be tempted to fund growth by borrowing from future tax liabilities. It'll bite you. Sure, when you're bigger and you have cashflow there comes complexity, but early on, just make sure you have enough cash in a savings account to cover what will be due.
Yeah that's a classic way for a business/person to go bankrupt, touching the tax money. Don't do it.
25% is safer. Although if your income is less than 10-20 grand, then you'll likely pay around 10%
Because I can't edit the original post: I meant to ask what was proper way to handle taxes, as a first time freelancer in the US.
In the UK it's around £8,000