Unlike traditional employees, freelancers do not have taxes automatically withheld from their income, which means a portion of every payment needs to be set aside manually to avoid a stressful surprise later.
A commonly used starting guideline is setting aside around 25 to 30 percent of freelance income for taxes, though the right number depends on your total income, deductions, and location. Many freelancers keep this money in a completely separate savings account so it is never mistaken for spendable income.
Because tax situations vary significantly, working with a tax professional at least once a year is generally worthwhile for freelancers, especially as income grows. This article is educational only and not tax advice.