The CPA Journal Archive

bookkeeping for independent contractors

If you’re looking for a good template contract for an independent contractor agreement, the plain contract is a good place to start. They tend to get paid for projects, they worry about their own taxes, and work when and where they want. If you’re doing work for someone, bookkeeping for independent contractors you’re not on their payroll, and you signed a contract with them, you’re probably an independent contractor. Most people who call themselves “freelancers” are considered to be independent contractors by the IRS—the two terms are basically interchangeable.

With the right strategy, you can find paths to lower your tax bill and keep more money in your pocket. Let’s unpack the ways independent contractors can identify and track deductible business expenses. While QuickBooks can’t replace human bookkeeping services, it empowers you to maintain your books more accurately with less effort. When you do hire an expert, they’ll be able to review and reconcile your documentation more quickly, saving you money.

Why Bookkeeping is important for independent contractors

This ongoing preparation makes it easier when it’s time to file your income tax return. Keeping a close eye on expenses related to your business, including the business use of your home, helps ensure you don’t miss any opportunities to reduce your tax bill. One of the main advantages of outsourcing bookkeeping services is the expertise you gain access to.

QuickBooks has versions for both Windows and Mac, as well as an online version, which works best for independent contractors. We’ve listed the regular price, but each plan is discounted during your initial subscription. It also eliminates the need to manually create invoices for each project. This time-saving automation lets you focus on your core work rather than administrative tasks or creating new invoices every time you need to request payment from a client.

What Is an Independent Contractor Agreement for Accountant?

To ensure you can use QuickBooks to its fullest potential, we’ll also train you on the intricacies of the software. In addition to maintaining accurate records, a skilled bookkeeper can also help you identify trends and patterns in your financial data. Now that we understand the vital role that a bookkeeper plays in the financial management of independent contractors, it is crucial to find the right bookkeeper for your business. Hiring the right bookkeeper can make a significant difference in the success and efficiency of your operations.

  • It shows that you’re on top of things financially and you understand what you’re doing as a self-employed business owner.
  • It can be a huge chore if you try to reconcile your books on your own.
  • Read more about misclassification and the difference between hiring employees and independent contractors.
  • Outsourcing bookkeeping services alleviates this stress, allowing you to have peace of mind regarding your financial affairs.
  • Staying informed about the latest tax regulations is vital for 1099 contractors.

You can stuff your receipts into one of our Magic Envelopes (prepaid postage within the US). Use our receipt tracker + receipt scanner app (iPhone, iPad, and Android) to snap a picture while on the go. Or forward a receipt to your designated Shoeboxed email address. Hiring a professional to take care of the books will give you more time to concentrate on growing your business. One of the most important tasks for an independent contractor is to track every financial transaction.

Never let your bookkeeping and accounting fall behind

As an independent contractor, you’re going to have to learn to manage these things on your own. 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. It can be a huge chore if you try to reconcile your books on your own.

bookkeeping for independent contractors