Our bookkeeping products for independent contractors provide the perfect solution to your business needs. The BooksTime team consists of experts from various industries and bookkeeping areas. Here you can find CPAs with twenty years of experience, financial advisors, bookkeepers, forensic accountants, and more. Consider bookkeeping for independent contractors what level of support and communication you require from your bookkeeper. Clarify your expectations and find a bookkeeper who can meet your specific needs. When it comes to managing the financial aspects of their business, independent contractors can greatly benefit from the support and expertise of a bookkeeper.
- The only way you wouldn’t have to pay is if you meet all three of the IRS’s criteria.
- The thing is, we have to do these deliveries on our own dime.
- If you work as an independent contractor, you are technically working for yourself.
- This information is critical for managing cash flow and preparing tax returns.
One of the primary responsibilities of a bookkeeper is to maintain accurate and up-to-date financial records for independent contractors. This includes tracking income from various clients, recording expenses, and reconciling bank statements. By keeping detailed records, a bookkeeper provides contractors with a clear picture of their financial health, allowing them to make informed decisions regarding their business. As I mentioned earlier, independent contractors are not employees—they are self-employed and work for clients on a contract basis.
Prepare for the Future
By doing this, the business expenses can offset some of the gross profit which will reduce some of the tax obligations. When it comes to running a successful business as an independent contractor, maximizing profitability and fostering growth are top priorities. This is where a skilled bookkeeper can play a crucial role in your business strategy. Now that you’ve completed your Schedule C and Schedule SE, you have the income and deduction information you need to finish filing your 1040 personal tax return. If you can’t file your taxes by the April 15 deadline, you should use Form 4868 to file for an automatic six-month extension. But that’s only an extension to file your paperwork — if you owe any taxes, you’ll need to pay them by the April 15 deadline to avoid being charged a penalty.
No matter how successful you feel as an independent contractor right now, it would help if you looked to the future. Recording every expense is necessary whether you are big or small. If you do not have the documentation, you cannot back up your costs if there is an audit. The biggest downside to Bench is that if you need the Premium plan, you’ll have to sign an annual contract, so if you’re not happy with the plan, you’re on the hook for an entire year.
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Having a clear picture of their financial figures will help any independent contractor understand their business better. 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. As a contractor, keeping your accounting transparent will also allow you to see your income and expenses more clearly. The clarity in financials will allow you to make smart decisions on the growth of your company. How your friend does their bookkeeping might be different from how you do it.
There are free and paid versions, and typically the paid versions have more features. Some apps offer free 30-day trial periods and others offer discounts for paying annually in advance. As an independent contractor, it is important to accurately and consistently track your financial transactions. 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.
You won’t know exactly how much tax you owe until you file your personal tax return at the end of the year. But you’ll want to spend time estimating this because if you underpay your estimated taxes, you could be subject to penalties. Remember that an independent contractor is considered to be self-employed, so in effect, you are running your own one-person business. Any income that you earn as an independent contractor must be reported on Schedule C. You’ll then pay income taxes on the total profit. It’s easy to use, it can link up with your bank accounts and it’s designed to make it as easy as possible to figure out your expense categories. It costs less that Quickbooks Self Employed and has more flexibility for customizing income and expense categories.
However, take time to review the benefits of each of the QuickBooks online plans, especially if you have multiple clients or plan to have multiple clients in the future. There will be a video that accompanies this guide on how to set up QuickBooks self-employed. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service.
Since they will have access to sensitive financial information, you need to be confident that they will handle your finances with professionalism and integrity. Look for someone with excellent attention to detail, strong organizational skills, and a track record of delivering accurate and timely financial reports. You’ll get monthly financial reports and can rest easy knowing the books are taken care of. Bench doesn’t include accounting, but it does provide the reports and support you need for your accountant to take care of things come tax day.
What is an independent contractor?
We believe everyone should be able to make financial decisions with confidence. Stride is a free app that has some basic expense tracking. My biggest complaint with Stride is if you have an expense that doesn’t fit the expense categories they show, you can’t put it anywhere else.
Which accounting method should independent contractors use?
For most independent contractors, it will be beneficial to bring in a CPA to at least help during tax season. A good accountant can help you with tax season and also create and decipher financial reports like your balance sheet, income statement, statement of cash flow, and more. It gives you a more transparent look into where your business is right now and how it is trending. Accounting software for independent contractors works like other accounting software in that you download the app, create an account, and start entering your data. It will also suggest categories for organization and store everything related to accounting in one place.
