The mobile app automatically tracks the miles you drive for work, making end-of-year tax write-offs as simple as possible. And since QuickBooks’ parent company, Intuit, also owns TurboTax, QuickBooks Self-Employed is a solid pick for freelancers who typically use TurboTax to file. To get the most tax assistance, you can sign HVAC Bookkeeping up for a QuickBooks Self-Employed + taxes plan, which includes additional filing help from tax professionals. Rather than a payroll expense, independent contractors should be treated like any contract work.
Self-Employment Taxes
Outsourcing bookkeeping is a strategic investment in your business’s financial stability and growth. Reconcile your accounts at the end of each month to make sure your books and accounts accurately reflect your income and expenses. Accounting software can be helpful, and hiring a professional from a firm that offers small business accounting services can be even more so. Most independent contractors can benefit from hiring a CPA to help during tax time to help prevent potential mistakes.
Contractor Bookkeeping: The Ultimate Guide for Independent Contractors
As mentioned before, most of the popular bookkeeping and accounting software on the market has built-in features for maintaining records built in, which makes this process much easier. You can always integrate an expense management app, of course, but built-in expense tracking would make for an even easier accounting solution. Finally, Zoho Books doesn’t sync with as many third-party apps as competitors. While you can sync other Zoho products to your Zoho Books account, you don’t have many ecommerce or inventory management options. Plus, the free plan limits your online payment gateways to Stripe and PayPal.
Digitizes receipts and documents
- Every FreshBooks plan lets you send an unlimited number of estimates and customizable invoices.
- There can be audits without proper filings, or you can miss out on tax deductions like Matt.
- If you rely on ecommerce apps like Shopify and Expandly to manage an online store or track inventory, Xero is your ideal freelancer accounting platform.
- Accounting for independent contractors, however, is a lot more complicated.
- You don’t have to hire a bookkeeper or accountant, but it is very beneficial when filing and paying your taxes.
- Instead, send unlimited invoices to an unlimited number of clients with each plan (and schedule automatic payment reminders too).
Find out what 1-800Accountant can do to guide and improve your bookkeeping. Once you have chosen a bookkeeping method, you can begin setting up your bookkeeping system. This may include creating a chart of accounts, setting up a system for recording financial transactions, and establishing a process for reconciling bank accounts. If you aren’t sure about what type of system you independent contractor bookkeeping need, we recommend reaching out to a professional bookkeeping company, like BooXkeeping, for a free consultation. QuickBooks Online, Intuit QuickBooks’ cloud-based accounting program, has a famously low learning curve. Features like automatic bank reconciliation, receipt tracking, and expense categorization (by tax category) help freelancers maximize earnings and tax deductions.
Wave doesn’t have any paid plans—instead, its free plan gives you more than what a lot of paid plans charge you for. Unlike FreshBooks, it doesn’t curtail your client number or monthly invoices. And like QuickBooks, Wave automatically categorizes your receipts and expenses by tax category, but Wave does it for free instead of for $30 a month. It helps to consult with an accounting professional to help you set up your accounting system and establish a process for maintaining appropriate records. Invest in bookkeeping services on the front end and help your freelance hustle unearned revenue to be efficient and thorough with its records right from the start.
- Currently, that means you will pay 15.3 percent for social security, 12.4 percent for Medicare, and 2.9 percent for both.
- It is advantageous to have everything separated in the event of an audit, especially if you consider yourself to be a business.
- For more bookkeeping software guidance, check out our piece on the best accounting software for the self-employed.
- As an independent contractor, you hold the reins of your financial affairs.
- There should be a receipt for every expense and an efficient system for organizing and storing all business receipts.
Outsourcing your bookkeeping gives you the gift of time—a priceless resource for any business owner. By examining your past and present, financial reports can help your organization get ready for the future and get you ready to make decisions. A customer is required to file and send you a copy of Form 1099-MISC whenever you accomplish work for them that costs more than $600. This is an informational form that must be submitted to the IRS in order to report non-salary income. You should contact your client again if they fail to provide you a Form 1099-MISC.
Select Individual or Business to Begin
Most notably, Xero, Zoho Books, and FreshBooks have easy-to-learn software and simple setup. And all three companies have much better customer service than Intuit, so if you run into a snag with your account setup, you’ll get better help—and faster help too. Wave doesn’t have an accounting app, which means you can’t upload receipts or track mileage like you can with Xero, FreshBooks, Zoho, and QuickBooks. If you manage clients and inventory with financial tools other than Wave, you’ll likely spend more time on redundant data entry than you’d like.