The third reason

It is significant that you keep up with your income and expenses as a self-employed freelancer. I hope you have been keeping path of it somehow throughout the year, but if you haven’t, then now is a good time to get all of that in order. A good place to start is to look at your invoices. Look to see how much you have billed and either look or recall if they have been paid. Start an Excel document or a list of all invoices paid and all invoices with standing determined. Depending on the accounting system you use, cash or accrual, some or all of this information will be needed. In a nutshell, if you are on a cash accounting system, which is the system most freelancers use, you count income as when you be given a check; if you are on an accrual accounting system you count income as what you billed. As for expenses, this is where things can get hairy. All of your business expenses should be records somewhere (Excel/Numbers, online bookkeeping program, or something) and you should have all receipts. Ideally, you have written what you purchased on the receipts and why. Such expenses that you will want to make sure you have a record of them are office supplies (ink, pens, paper, etc), individual client expenses (printing, website hosting, etc), technology/equipment purchases (computers, printers, hard drives, etc), prospective expenses (lunch meetings with clients or prospects), and travel expenses (which is a bit more hairy, but include mileage to and from meetings, etc). With these types of your expenses, your accountant will determine what is acceptable in the eyes of the IRS and what isn’t. For instance, most of the time any time you pay for lunch with a prospect, you must state on the receipt that it was with and what you discussed, and even then the IRS will only let you to deduct half of that.