Boost Your Freelance Business: Practical Guide on Bookkeeping for Independent Contractors

You can sign up for a month of free bookkeeping to get a feel of the best accounting and bookkeeping for independent contractors. As an independent contractor, you work for yourself, which means you’re responsible for paying your own Social Security and Medicare taxes. You’re also required to pay for any employment benefits you’d like, including ones an employer would normally contribute to, such as health insurance and retirement accounts.

Never Mix Personal Expenses with Business Expenses

Doing so is especially important when it comes to bookkeeping for taxes since most business expenses will be tax deductible when it comes time to file. While it may seem like income is the first thing you want to follow with your independent contractor record-keeping process, expenses are the key. It’s good to know how much money you’re making, but it’s recording transactions also crucial to understand how much you’re spending and where. Your accounting needs will vary as an independent contractor, whether an electrician, a rideshare driver, or a freelancer. But whatever you do, you’re effectively functioning as a small business owner, which gives you certain obligations and opportunities, and bookkeeping is crucial for all of it.

Establish your Business Entity

We also considered the tax and reporting features since most freelancers would be more concerned about tax compliance. If you need to pay bills, then you can easily upgrade to the Essentials plan. Documenting every expense and income ensures accurate financial tracking. Independent contractors should create a habit of logging all business-related expenses, such as office supplies or travel costs, and all sources of income.

Never combine personal and business expenses

We are the best in the Oklahoma market centering our operations in south Tulsa. E3 Bookkeeping makes sure our clients have the best books at the end of the month and the end of the year. You can integrate Deel with your favorite accounting software such as Quickbooks or Expensify to seamlessly sync data. Better Bookkeepers is the ultimate solution to your independent contractor’s bookkeeping needs. Get in touch with us and schedule a consultation to find out more about what we can do for you.

Expenses are just one of the things you should be keeping track of with your independent contractor bookkeeping. Here are the critical standard bookkeeping terms you should be familiar with, and they should be your top priorities on the list of what to keep track of as an independent contractor. Join over 1 million businesses scanning receipts, creating expense reports, and reclaiming multiple hours every week—with Shoeboxed. You don’t have to hire a bookkeeper or accountant, but it is very beneficial when filing and paying your taxes. Filing late or Bookstime incorrect amounts of taxes can result in penalties and fines. 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.

Digitizes receipts and documents

Accounting for independent contractors doesn’t have to be overwhelming. By implementing basic accounting principles and leveraging tools like QuickBooks or FreshBooks you can streamline your financial management. Organizing receipts setting aside tax funds and maintaining meticulous records are crucial steps.

• Even if there are some immediate advantages, like avoiding having to pay taxes on that money, getting discovered during an audit is not worthwhile.
• Deel also offers a Tax Feature for those with US-based contracts.
• 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.
• Verify that the bookkeeping service uses modern accounting software that integrates seamlessly with your existing systems.
• Not sure if your cell service goes under Office Expense or Other Expense?
• If you attempt to reconcile your books on your own, it can be a monumental task.

Contractors can easily access the Tax Advice tab on their home page within the Deel platform to connect with a qualified tax advisor in their country of residence. It’s a straightforward process that provides personalized assistance tailored to the contractor’s specific needs. Many bookkeeping for independent contractors contractors try to be superheroes, juggling every aspect of their business. Outsourcing your bookkeeping gives you the gift of time—a priceless resource for any business owner. A mobile app is important for freelancers who work across different devices. The mobile app must also have the same features as the desktop or web-based app for accessibility.