You can escape a traditional 9-to-5 job, but you can’t escape taxes. 

That’s what a new batch of freelance workers and side hustlers are learning now that tax season is underway. While it’s never fun or easy to tally up your bill to Uncle Sam, those who are self-employed face a particularly complicated process because there’s no company payroll department to compile income figures or withhold taxes. 

And with a record 60 million Americans freelancing last year—about 39% of the workforce, up from 36% in 2021—more people than ever are navigating confusing tax questions. Most issues revolve around accurate record-keeping. Think of it as a tradeoff: No employer is keeping track of you, but you have to keep track of all your expenses and profits. 

“Freelancing, gig work and working for yourself mean taking control of your finances, and that includes your taxes,” said Ryan Greiser, founder of Opulus, a financial planning firm in Pennsylvania. 

Here are some of the most common mistakes freelancers make when filing taxes and how to avoid them: 

Forgetting to Track Everything
Organization is key when working for yourself. Keeping careful, detailed records can save you from major headaches and extra work when tax season rolls around. 

Greiser recommends recording every penny going in and out, but also saving invoices and receipts in case you need to double check them later on. “Failure to do so can result in underreporting of income, which can lead to potential fines or penalties from the IRS,” he said. 

Accounting software like QuickBooks, Xero and Freshbooks can make the process easier, said Matthew Daniel, co-founder of Columbus Wealth Management in Ohio. They all offer plans that cost less than $20 a month, as well as more elaborate options. 

Even if you end up hiring a professional to help with filing, they’ll still need to see all records of your expenses and profits. 

Mixing Business With Personal
To help with tracking expenses, experts recommend setting up separate bank accounts and credit cards for work and for your personal life. 

Workers who combine the two may overlook possible tax deductions for business costs, said Craig Toberman, founder of Toberman Wealth in St. Louis. That means you could end up paying more taxes then necessary. 

On the flip side, combining accounts could also lead to incorrect deductions, especially for easily mixed-up costs like travel and meals. Be clear in your own mind and in your records whether an expense is business or personal. Toberman, for example, uses a mileage-tracking USB from TripLog, which plugs into his car and allows him to categorize drives as business or personal. 

Not Deducting Business Expenses
A big perk of self-employment is being able to subtract business expenses from your tax bill. Neglecting to do so effectively means paying the government more in taxes than necessary. 

“Most freelancers figured out how to make money without an employer and don’t truly understand that they are running a business which qualifies for deducting business expenses,” said Chris Russell, founder of San Diego financial planning firm Tempus Pecunia.

The list of possible write-offs includes everyday and often-overlooked items like cell phone, internet and utility bills along with new equipment like computers and tablets. Business meals and travel expenses can also be deducted. 

Not Making Quarterly Payments
Freelancers and self-employed individuals are generally required to make quarterly estimated tax payments since they have no employer withholding the taxes for them. 

“This catches a lot of people by surprise when they file their returns and weren’t budgeting for this or making estimated payments along the way,” Daniel at Columbus Wealth Management said.

Those who either underestimate the amount of tax or forget to pay could be subject to a penalty. 

When you make the quarterly payments, it’s also important to keep those receipts so you have them on hand when filing your annual returns.

Forgetting Retirement
You may not have an employer-sponsored 401(k) as a freelancer, but you can still save for retirement.

Some tax-advantaged options include a Solo 401(k), traditional IRA, SEP IRA, Simple IRA or Roth IRA, said Spenser Liszt, financial planner at Paradigm Advisors in Dallas. 

This also helps you save on taxes since you can deduct contributions. 

“Freelancers often overpay in taxes because they didn’t realize they might be eligible to open a retirement plan for their business, which they could make tax-deductible contributions to during the year,” said Greg Goff, founder of Sound Wealth Management in South Carolina. 

This article was provided by Bloomberg News.