As an independent contractor, one of the most challenging parts of your role stems from staying on the right side of the law. The rules for independent contracting are quite a bit different to that of a standard employee, and thus it can all become a bit of a challenge to get things prepared and moving in the direction that you had intended. To help you through that, we recommend that you take the time to hire a professional tax preparer, such as a CPA.

They can help you through the most challenging parts of the process in your own circumstances.

However, at the same time, it pays to know what to look out for in the first place. Knowledge is power, and with the IRS that certainly is the case. Here are some of the must-avoid mistakes that many people go through, which can bring damaging and terrifying audits and the like down on top of you.

  • Not reporting your full income is the first and most obvious IRS red flag. Remember, just about everything you do will be noted by yourself or by the party that you worked for/with. If you fail to report income, even innocently, it can leave you with a real challenge on your hands to come up with a legitimate and fair explanation.
  • An excessive level of business expense is sure to get more than a few eyebrows being raised at IRS, too. Make sure that you are fair and honest with what you report as an expense. Working with a CPA, you can find out what is and is not going to cut it as an IRS expense, meaning that you can easily avoid the excessive and challenging problems other contractors face.
  • Wrong classification of workers can change a lot, too. If you go down in the wrong category, then it can make your whole tax return look out of sync with reality. To avoid any accusations of skulduggery, be sure to take the time to better understand this so that you can work around the problems and feel more secure in the decisions that you make.
  • Lastly, huge and over-the-top business losses is sure to get you asked if what you do for a living is legitimate, or a cover-up for a hobby that you want to avoid paying tax on.

Either way, hiring a CPA can ensure you’re always above-board.