Dec 30, 2020 02:32:10 PM by Katie K
I'm recording business transactions on my own in an accounting software. If I'm giving my tax person my profit & loss for my business, can someone clarify how I record the income from Upwork jobs and the 20% fee in my accounting software?
For example, let's say I have a $100 job from Upwork. After the 20% Upwork fee, I earn $80. So: Do I record my income as $100 in my accounting software and then add in a $20 business expense? Or do I only enter $80 as my income for that job, and no businness expense?
Do I look at the Upwork scenario the same as if I'm paying the 2.9% processing fee on what a client sends me in a non-Upwork scenario? (i.e. if they send me payment through Stripe, Paypal. etc, I would enter $100 as income and $2.90 as a busuiness expense).
Dec 30, 2020 02:42:00 PM by Preston H
There is not one way to do that.
There are many ways to do that.
Upwork is not going to tell you how to do your taxes.
Forum participants may indeed weigh in with their suggestions. But ultimately, nobody here is familiar with all the details of your tax and business situation. We wouldn't be able to offer you the best possible authoritative advice.
You may wish to consult with your local tax experts and authorities.
Dec 30, 2020 02:52:07 PM by Jennifer R
Katie K wrote:I'm recording business transactions on my own in an accounting software. If I'm giving my tax person my profit & loss for my business, can someone clarify how I record the income from Upwork jobs and the 20% fee in my accounting software?
For example, let's say I have a $100 job from Upwork. After the 20% Upwork fee, I earn $80. So: Do I record my income as $100 in my accounting software and then add in a $20 business expense? Or do I only enter $80 as my income for that job, and no businness expense?
Do I look at the Upwork scenario the same as if I'm paying the 2.9% processing fee on what a client sends me in a non-Upwork scenario? (i.e. if they send me payment through Stripe, Paypal. etc, I would enter $100 as income and $2.90 as a busuiness expense).
Since you will have two invoices (one for the client and one from Upwork) you should enter both. This way it is easier to track everything if needed.
Dec 30, 2020 03:41:16 PM Edited Jan 1, 2021 04:07:59 PM by Will L
Katie,
In the US a freelancer/consultant/self-employed person can be best off to report the gross amount of all billings each year as income and then deduct all related fees and expenses to calculate taxable income. (For tax payers with a certain level of annual income, the IRS apparently wants/requires tax returns to provide these details. Consult a tax professional or the IRS to find out for sure.)
This approach might maximize the taxpayer's total allowable deductions at more than the standard deduction, resulting in a lower effective income tax rate.
I have found J. K. Lasser's and NOLO's books for small businesses and the self-employed (available on Amazon) are very informative in respect to income taxes and other issues.
Good luck!
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