I was exclusively self-employed due to social anxiety for 12 years. I filed Schedule Cs every year and never had any issues. I am not an accountant nor do I have anything against accountants but the taxes are usually pretty straightforward and doable for someone capable of holding a job as a programmer. It might be a better use of resources and peace of mind to outsource it, though.
The main thing, as mentioned, is that your employer is no longer “paying” their 1/2 of the FICA. I say “paying” because the employee really pays for it indirectly anyway since it is part of the cost of employing you. You just never see that part in your pay or paystubs. So, it looks like you are paying much more in taxes, especially if your rates are too low. You do get a deduction on your federal income taxes to offset that (basic tax software does it automatically).
GET AN ACCOUNTANT.
Seriously, do this NOW. Not something like H&R Block or TuboTax, get a real, live CPA. Failure to do so could become extremely costly.
This is a question for a CPA and/or a lawyer.
Seriously, if you’re thinking of going into business for yourself you should have a CPA and know/use a lawyer. That does NOT mean having a lawyer on retainer or other expensive crap, it means you have someone to go to with a legal question, help you with legal documents, and yes, also help you with setting yourself up as a business which, among other things, will protect your assets and those of your family.
Yes. You will need to pay your taxes quarterly. Failure to due this properly can result in fines.
This is another question you can ask your accountant.
An accountant can also hep you set up a bookkeeping system, which you will also need, tell you what you need to track and how to keep the IRS happy.
It’s fine to ask around on the internet and do some research on your own, but this is an instance where you should go to someone who is a real-life expert. There will be an up-front cost but consider it an investment. It’s a lot cheaper to pay the start-up cost than to try to clean up a mess afterward.
::sigh:: If only I was a poor, poor, billionaire with a private jet. Then my tax burden wouldn’t be so bad.
Mostly everything’s been covered, for a software developer, I’d talk to a CPA to find out how to do your taxes, but I’m not sure you really need a CPA to do your taxes, or a lawyer.
But I’d add: If you can, find out what the going contractual hourly rate is for what you do (for example, if your employer billed clients for the work you did and you know how much they charged). If you can’t find it, quote people at least 3x your hourly salaried rate as a start point. It’s not unreasonable and you’re gonna need it. My employer bills clients for my work at 5x what my salary is per hour.
I contracted for a year for my current employer before they made me W-2. I was cash poor and so didn’t set aside anything for taxes. I thought I knew how much it was going to be but I had one part wrong and had a whopping tax bill. It was no big deal, I went on a payment plan with the IRS, but I was surprised by the gross amount I was off by.