Bookkeeping for Independent Contractors: Simplify Easily

Proper bookkeeping can help you stay organized, make informed financial decisions, and prepare for tax season. Furthermore, it can provide you with a clear understanding of your business income and expenses, helping you make informed decisions to grow your business. They will be able to pay their taxes to the IRS with more accuracy. They will better understand how to charge for their services by understanding their expenses. Hiring a professional to take care of your bookkeeping services will allow you the freedom you need to grow your business as an independent contractor.

What Deductions Can a CPA Help You Identify?

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A CPA can review your year-end balance sheet, statement of cash flow, income statement, and other financial records, giving you valuable guidance on what to do going forward. Since independent contractors don’t have taxes withheld from their paychecks, they must pay self-employment taxes quarterly. You risk receiving payment directly to your personal account if you are not careful to keep your personal and company bank accounts separate. You may create financial reports that will enable you to plan and make informed decisions for the future with the aid of proper bookkeeping.

About Shoeboxed!

It will also be easier for you to see your income and expenses as an independent contractor if your bookkeeping is transparent. You can decide wisely on how to expand your business thanks to the transparency of the financials. The simplicity of invoicing accounting software will make this easy to accomplish. You may invoice your customers and keep track of overdue invoices with accounting software. Manually entering revenue and expenses in a spreadsheet may work until your business gets busier.

The Ultimate Guide To Bookkeeping for Independent Contractors

Our team will file your tax return based on your books, records and any additional information you provide. Our tax professionals decipher between all of your expenses and determine what tax is deductible or not. We then combine all of your information and prepare all necessary forms and schedules.

Outsourcing to a Professional

Contractors must stay on top of invoicing, expenses, tax returns, and more on their own. To learn more about an independent contractor agreement for an accountant and bookkeeper, you can post your legal need on UpCounsel’s marketplace. Having a clear picture of their financial figures will help any independent contractor understand their business better.

• On the other hand, the company doesn’t withhold these taxes for independent contractors.
• While freelancing comes with many benefits, it means taking responsibility for your business finances.
• Shoeboxed is an expense & receipt tracking app that helps you get reimbursed quickly, maximize tax deductions, and reduce the hassle of doing accounting.
• If you’re a freelancer and want simple accounting with a focus on your needs, FreshBooks is a solid choice.
• Get ready to tackle bookkeeping with confidence and create order from the chaos.

We narrowed them down to the top seven after reviewing the most popular ones. We chose these as our best accounting apps for independent contractors based on their functions, features, and integrations. We also looked at their pricing, number of versions offered, and whether they tailor the app to the specific needs of independent contractors. Bookkeeping helps ensure you’re accurately reporting income and claiming eligible deductions. Poor records can lead to tax errors, missed deadlines, or audits—each of which could cost you time, money, and peace of mind. Keeping clean books allows you to prepare quarterly tax payments properly and file your annual return without stress.

Many small and medium-sized businesses find it hard to keep good books. Bookkeeping is critical to running a successful business as an independent contractor. Mixing personal and business expenses makes it harder to track spending, increases the risk of missing deductions, and complicates tax filing. Independent contractors often juggle multiple clients, making it essential to issue invoices on time and keep a clear trail of receipts. Digital tools and bookkeeping software can simplify this process, ensuring nothing slips bookkeeping for independent contractors through the cracks.

• A lot of independent contractors find themselves spending countless hours hand-keying data–which takes up way more time than it is worth.
• LYFE Accounting has extensive experience in servicing independent contractors.
• It simplifies bookkeeping, making it less time-consuming and more accurate, instilling confidence in your financial records.
• Bookkeepers often work from home, as their tasks can usually be done online.
• This includes recording income, expenses, payments, and other financial transactions that occur within a business.

BGW Advisors, LLC and its subsidiary entities, which are not licensed CPA firms, provide tax, advisory, and other non-attest services to its clients. The entities falling under the BGW brand are independently owned and are not liable for the services provided by any other entity providing the services under the BGW brand. Our use of the terms “our firm” and “we” and “us” and terms of similar import, denote the alternative practice structure conducted by BGW CPA Co, LLP and BGW Advisors, LLC. However, as you and your client list grow, you will want a more in-depth picture of your business. Double-entry bookkeeping gives you a better understanding of your company.

What Does the Bookkeeper Do?

Outsourcing bookkeeping allows you to focus on revenue-generating tasks while leaving the time-consuming financial management to experts. Installing the software and getting to a point where it’s working for you at an optimal level can be challenging. Here at Better Bookkeepers, we’ve installed QuickBooks with countless clients. Not only can you ensure a seamless installation process by hiring us, but we’ll set it up to serve your business optimally and ensure you have a good understanding of how it works. To ensure you can use QuickBooks to its fullest potential, we’ll also train you on the intricacies of the software.

Recording Income and Expenses

This includes federal and state income tax, Social Security, and Medicare. They ensure compliance with all tax laws and regulations, preventing potential issues with the IRS. And fewer hours of work for them means less expensive accounting for you.

Bookkeeping and taxes are two facets of accounting to pay special attention to. You don’t want errors or postponed/forgotten responsibilities to ruin what you are working hard to build. If you’re considering hiring a freelance bookkeeper, it’s important to establish a clear agreement on services and fees. A well-defined invoice template can help ensure both you and the bookkeeper are on the same page regarding payment terms and deliverables.

But as an independent contractor, you might not have understood how crucial it is to make sure you stay on top of your bookkeeping and accounting. Note that not all income is taxable, and some forms of income may be taxed differently. Open a dedicated business bank account to avoid mixing personal and business expenses. This simplifies tax filing and protects your records in case of an audit. Every dollar you earn or spend in your business should be recorded. This includes payments from clients, subscriptions, tools, equipment, and any other operational costs.

Additionally, accurate data assists you in collecting money from your customers quicker (invoice customers faster to receive payment faster). It also helps you prove your case during a tax audit and lowers your tax burden when you can write off business expenses. It’s how you and your professional accounting team can make educated decisions based on your history and turn them into a plan for the future. Under accrual-based accounting, you’ll count money and expenses as you earn them, which isn’t the same as when you or bills get paid. It allows contractors and their accountants to get a better look at the future of their business than with cash basis accounting. Employers don’t maintain records of contractor hours; you must do that.

A CPA can handle these responsibilities, freeing up your valuable time to focus on growing your business​​. As a small business owner, I don’t have a lot of time to spend on bookkeeping, but it’s essential to the success of my business. Outsource-Bookkeeper.com has taken the stress out of bookkeeping for me, providing a cost-effective and reliable solution that allows me to focus on what I do best. Their team is responsive, efficient, and always willing to go the extra mile to help out. You will want to open a bank account specifically as an independent contractor business.