4Corner Business Services: The Importance of Monthly Bookkeeping for Independent Contractors

Before classifying a worker, consider how much control you have over a worker in the three above categories. Get the full rundown on what you need to know about self-employed earnings bookkeeping for independent contractors and self-employment tax. Receipts and expenses are stored, organized, and ready for when you need them. With the TurboTax bundle, you can instantly transfer your financial data.

• 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.
• Having organized books will also help your business ensure that every invoice is sent out on time, that your accounts receivable is not going unpaid, and that you pay your credit card bills.
• Whether you’re a part-time independent contractor or growing your enterprise, you’ll need to manage your finances, and that means seeking out an accounting app.
• As such, many who work as independent contractors juggle the different challenges and opportunities of their work themselves.
• 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.

You can take advantage of a variety of tax deductions, but you have to document your expenses with receipts and invoices. Join over 1 million businesses scanning & organizing receipts, creating expense reports, and more—with Shoeboxed. Turn your receipts into data and deductibles with our expense reports that include IRS-accepted receipt images. Also, because there is so much to keep track of, it’s important to stay on top of all of the accounting and bookkeeping duties. One of the most important tasks for an independent contractor is to track every financial transaction. The flip side is that you don’t have an employer to handle financial aspects such as benefits, taxes, and retirement.

What Is an Independent Contractor?

Tracking the money you bring in and the money you send out of your account is essential as an independent contractor. Employers must look at all of the above points to determine worker classification, not just one. If you’re unsure about whether or not the FLSA’s factors apply to your worker, contact the Department of Labor for additional information. When looking at behavioral control, think about whether your company has the ability and right to control what the worker is doing and how they complete an assignment. The paperwork previewed in the image will provide the structure and language for an Accountant/Bookkeeper to solidify a Client job. It may be downloaded by clicking any of the buttons in the preview image’s caption area or through the links above.

An expense for “Materials & Supplies” would typically include any tangible items used to produce your products, such as pens and pencils for a tutor or paintbrushes for an artist. “Materials & Supplies” may also include raw materials used to make products you sell, such as wax for candles or fabric for clothes. Payroll might not be the first thing that jumps to mind when you think about making your construction business efficient.

Separate Business Expenses from Personal Expenses

The voucher will eventually be returned to the department if no action is taken to provide sufficient support. You or your worker can file Form SS-8 by filling out and mailing the form to the IRS. It’s critical for your business to accurately determine a worker’s classification. If you misclassify a worker, you could be subject to some hefty penalties and fines.

Employees can sign up for health insurance that’s been provided by their employer, but independent contractors are expected to obtain their own health insurance. Contractors aren’t considered employees, so while they enjoy more autonomy, https://www.bookstime.com/ that independence requires them to handle their own insurance and taxes. Contractors enjoy the autonomy and flexibility that come with being classified as an independent entity separate from the business they’re doing work for.

Best for Part-Time Contractors

In the simplest terms, if the employer controls what will be done and how it will be done, the worker is an employee. Your business structure affects your taxes, paperwork, and personal liability. →  Any income you received or earned is not considered salary or wages. You can deduct 50% of self-employment tax that you calculated on Schedule SE, because the IRS considers the employer portion of the self-employment tax to be a deductible expense.

The next article shall discuss how the Client will treat money the Accountant pays out of pocket in order to successfully complete the tasks he or she is being commissioned to perform. Retainer,” should be used to solidify whether the Accountant will be paid a retainer (for his or her availability). If so, then mark the first checkbox and present the dollar amount the Client will pay the Accountant to reserve his or her services. If the Client will not be obligated to pay a retainer, then mark the second checkbox. An independent contractor agreement for accountant and bookkeeper is an important document to determine, for tax purposes, that the worker is not an employee of the company. In addition to providing better tracking capabilities, monthly bookkeeping for independent contractors helps you more efficiently review your income and estimate upcoming tax payments.

Raleigh CPA for Independent Contractors

There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. Asking yourself these types of questions can help you determine if your worker is a contractor or an employee. If you have control over the project, the worker might be an employee. If you can’t control the work, the worker is more likely a contractor. Be sure to keep a copy of each contractor’s Form W-9 on file for your records. IRS Form W-9 is used to report nonemployee compensation of $600 or more.