If you are an independent contractor then you understand the pain of taxes! The process of paying taxes is the bane of my existence. For the non-believers, I'll take you through why it is so onerous.
First, taxes have to be paid EVERY quarter. This rule incentivizes you to keep up with your taxes and make sure you make the payments on time. Fundamentally, this is good, but it's super annoying. You have to remember each quarter to submit your taxes or you get a penalty fee. This fee and the tax debt accrue interest. In conclusion, don't forget to pay your taxes or Uncle Sam will be collecting a ton of additional interest and fees.
In order to file your taxes, you have to submit a 1040ES. This means that you have to estimate your taxes every quarter. This is both annoying and worrisome. How do I know that I have estimated the correct amount? The answer to that question is YOU DON'T. You may end up owing additional taxes if your estimate is too low. I'm not sure if they add fees or interest if you pay below the required amount. If you overpay, the government keeps your hard earned money interest free. Both scenarios are annoying.
To avoid any tax issues, I signed up for Zen99. This was a Y-Combinator company that helped independent contractors handle all of their tax needs. A month after signing up for the service, the CEO announced that they were closing down the company. As a side note, I got the chance to get on a call with the founder of Zen99. It was a very insightful conversation and it sounded like he had several good reason for shutting down the platform. Nonetheless, this action left me screwed.
The problem is growing as more and more people opt to be their own boss and freelance. I hope that I have paid enough taxes these last few quarters. But I don't know. I hope that another startup finds a way to help independent contractors with taxes.