Freelancing gives you freedom and flexibility, but it also means you’re responsible for getting paid and handling taxes on your own. Unlike traditional employees, freelancers don’t get automatic paychecks or tax withholdings. You have to invoice clients, track income, set aside taxes, and make sure everything is done legally. If that sounds overwhelming, don’t worry. This guide will break down how to get paid properly, handle taxes, and avoid costly mistakes as a freelancer in 2025.
How to Get Paid as a Freelancer
The first step to building a successful freelance career is making sure you get paid on time, in full, and without issues.
Step 1: Choose the Right Payment Method
Freelancers have multiple payment options, and choosing the right one depends on where your clients are located and how you want to receive money.
Popular Payment Methods for Freelancers
- PayPal – Easy, widely used, but has high fees (2.9% + $0.30 per transaction).
- Stripe – Great for handling payments on personal websites or invoices.
- Wise (formerly TransferWise) – Best for international clients with low conversion fees.
- Zelle – Instant, fee-free transfers for U.S. clients.
- Direct Deposit/ACH Transfers – Preferred for recurring work and retainer clients.
Pro Tip: Always factor in payment fees when setting your rates. If a platform takes a 3% cut, increase your rate accordingly.
Step 2: Use Invoices & Contracts
Sending invoices the right way makes you look professional and helps avoid late payments.
What to Include in a Freelance Invoice:
- Your name and business name
- Client’s name and contact info
- Invoice number for tracking
- Due date (Net 7, Net 15, or Net 30 days)
- Description of services provided
- Total amount due
- Payment methods accepted
Best Invoicing Tools for Freelancers
- Wave – Free and simple invoicing with automatic payment reminders.
- FreshBooks – Best for tracking income and expenses together.
Pro Tip: Always send invoices immediately after completing work to avoid payment delays.
Freelancer Taxes: What You Need to Know
Unlike traditional employees, freelancers don’t have taxes withheld from their paychecks. You need to track your income and expenses and pay taxes yourself.
Step 1: Understand What Taxes You Owe
Freelancers pay:
- Self-Employment Tax (15.3%) – Covers Social Security & Medicare.
- Federal Income Tax (10-37%) – Based on tax bracket.
- State Taxes – Varies by location.
Step 2: Set Aside Money for Taxes
Since taxes aren’t automatically deducted, set aside 25-30% of every payment in a separate account.
Example: If you earn $5,000 from a client, move $1,250 to $1,500 into a tax savings account immediately.
How to Pay Taxes as a Freelancer
Make Quarterly Tax Payments. The IRS requires freelancers to pay estimated taxes four times a year.
Quarterly Tax Deadlines for 2025:
- April 15 – Covers January to March income.
- June 15 – Covers April to May income.
- September 15 – Covers June to August income.
- January 15, 2026 – Covers September to December income.
How to Pay: Use IRS Form 1040-ES and pay through IRS Direct Pay or tax software like TurboTax.
How to Lower Your Freelance Tax Bill
Freelancers can deduct business expenses to lower taxable income.
Top Freelancer Tax Deductions for 2025
- Home Office Deduction – If you work from home, deduct a portion of rent or utilities.
- Internet & Phone Bill – Business-related phone calls and internet costs.
- Software & Tools – Adobe, Canva, website hosting, email marketing services.
- Office Supplies – Laptops, desks, chairs, and other work-related purchases.
- Health Insurance – If you pay for your own health coverage, it’s deductible.
- Business Meals & Travel – Client meetings, coworking spaces, and work-related trips.
Example: If you made $60,000 but had $10,000 in business expenses, you only pay taxes on $50,000 instead of the full amount.
Freelancer vs. LLC: Should You Register a Business?
Most freelancers are sole proprietors, but forming an LLC (Limited Liability Company) can offer tax benefits and legal protection.
Freelancer (Sole Proprietor) vs. LLC
When to Consider an LLC:
- If you make over $50,000 per year (LLCs can reduce self-employment tax).
- If you want legal protection (LLCs separate personal and business assets).
Final Thoughts: How to Get Paid & Handle Taxes as a Freelancer
Freelancing is a great way to make money and work on your own terms, but you need to manage payments and taxes correctly to stay profitable.
Quick Recap:
- Get paid the right way – Use invoices, payment platforms, and contracts.
- Track your income & expenses – Keep everything organized for tax season.
- Set aside 25-30% of earnings – Cover self-employment and income tax.
- Pay quarterly taxes – Use IRS Form 1040-ES to avoid penalties.
- Take advantage of tax deductions – Save money on business-related expenses.
- Consider an LLC – If you’re earning over $50,000, it may help with taxes.
The key is staying organized, planning for taxes, and making smart financial moves so you can grow your business without stress.
