Bookkeeping for Independent Contractors: Everything You Need to Know

How your friend does their bookkeeping might be different from how you do it. Most importantly, you must find a financial tracking system that works for you and stick to it. Keeping on top of the accounting and bookkeeping practices of your business is crucial to all independent contractors. As an independent contractor, you have a lot more freedom than employees of most workplaces. You pay taxes on your own, set hours on your own, and you are your own boss.

Intuit’s QuickBooks is the best-known accounting app for good reason. While it’s not perfect, it is one of the best accounting programs on the market today and sets a high bar for what business money management apps can do. QuickBooks is great for a wide range of businesses from solo freelancers to brick-and-mortar empires. Local bookkeeping firm is looking for an experienced accountant with strong computer skills to provide payroll and accounting services virtually.

What Is Accounting Software for Independent Contractors?

→  Any income you received or earned is not considered salary or wages. As the business grows, there are more aspects that require your attention, such as acquiring and maintaining clients. Independent contractors, since they are the sole business owner, are responsible for everything that goes on in the business. This separation of transactions will make it much easier when tax season rolls around or if you are ever audited. Be sure to have an efficient system for organizing and storing all business receipts.

If you have more than five clients, you’ll need the Plus version, but all of the plan tiers are reasonably priced. Independent contractors need to be thinking of bank account reconciliation. The practice of reconciliation will help you ensure that every transaction matches bookkeeping for independent contractors your accounts. If you are not diligent in separating your personal and business bank accounts, you might get paid directly to your personal account. Proper bookkeeping will help you set up financial reports that let your plan and make educated decisions for the future.

C. Status of bookkeepers and accountants as independent contractors

An employee will receive wages regularly, have taxes withheld from those wages, have their schedules created by their employer. Doing this process will help reviewing your financial statements easier and make filing your tax return, federal tax, payroll taxes a breeze. Each of them offers different services and specializes in a different area. We recognize this, which is why your independent contractor accounting services will be customized to fit your specific needs and goals.

• Not all accounting firms have experience working with different types of business entities– but we do.
• At the end of the year, you would issue a 1099 to an unincorporated independent contractor.
• While there are charges for some extra features like payment processing, payroll, and bookkeeping support, the free starting price point makes it a winner for many independent contractors.
• That means every transaction that brings money in and each transaction that goes out of the business account(s).
• There are free and paid versions, and typically the paid versions have more features.
• If you use a service like QuickBooks Payroll, tax withholdings for full time employees should be a cinch.
• Several customers on third-party review sites report problems reaching customer service or receiving a response to their problems.