Posted by: tajapl Category: Bookkeeping Comments: 0

bookkeeper independent contractor

When trying to track business expenses and income, it’s best if you have a separate bank account set up for your business as an independent contractor. Bookkeeping is critical to running a successful business as an independent contractor. Keeping track of receipts and invoices is essential for accurate bookkeeping. Receipts and invoices are a record of the financial transactions that occur within your business, which are critical for preparing tax returns and other financial reports. It is important to keep receipts and invoices organized and easily accessible for reference.

  • Paying taxes and having precise estimates of your upcoming tax obligations are quite beneficial.
  • An SEO consultant loves algorithms and data and works to improve a company’s online presence.
  • Or keep track of everything so that you only have to pay on what’s left over.
  • Proofreaders and editors work to ensure that written works are clear and precise in what they’re communicating.
  • Understanding their costs can help them choose how much to charge for their services.

The Bureau of Labor Statistics (BLS) expects 6% job growth in this field from 2021 to 2031. Peter Chen, a senior policy analyst for New Jersey Policy Perspective, a left-leaning think tank, said that often workers classified as independent contractors do meet the definition of employee. You don’t have to know all the secrets of doing ExCel or Google Sheets. Just create a place to put your income or expense and keep track. And real quickly – I should throw this while mentioning the Schedule C. A lot of people think they can’t claim their miles or expenses because there’s not enough there to itemize their deductions. The only time they’re a reasonable part of your business is if you’re buying the meal for someone else in an effort to improve your business (such as discussing the referral program with a friend).

How to become an independent contractor?

BooXkeeping is a nationwide provider of affordable outsourced bookkeeping services to small and medium-sized businesses. Note that not all income is taxable, and some forms of income may be taxed differently. It is important to consult with a tax professional or the IRS to understand your tax obligations and ensure that you accurately report all taxable income. It’s clear that accounting involves more than just crunching numbers⁠—it’s an in-demand field with countless opportunities to offer. Due to the exponential growth of the accounting and finance industry, the benefits of getting an accounting degree are more evident than ever before. This doesn’t mean that accountants will be replaced by machines, though.

Maybe keep a running total, so that it saves you the time to add it up later. Ultimately you want your records to make it easy to know how much you spent for each expense type. I’m not even going to try to begin covering those in this episode. What you (or your tax pro) will do is enter the total amount of income, and the total amount spent for each expense type. Again, a lot of people get freaked out because it’s hard to know all the IRS rules and all that.

Why is bookkeeping even necessary for independent contractors?

Early in his first term, Gov. Phil Murphy created a task force to uncover misclassifications, and last year bipartisan legislative support gave the Labor Department the power to issue stop-work orders. This allows the department to shut down operations of businesses with violations. According to the Bureau of Labor and Statistics, bookkeeper independent contractor the national average for bookkeepers is $21.90 per hour and $45,560 per year. If you’re slightly fuzzy on if you know the taxes, get help. It’s more flexible than Quickbooks, it has a GPS app, and seems well designed. Stay tuned, I’ll be putting out a review soon after I’ve had more time to add information to it.

If you’re able to harness the power of words, stay on top of digital trends, and get creative, consider stepping into the shoes of a social media manager. Your main task will be to pilot a brand’s voice across the digital space. If an eye for detail and a knack for organization are your strengths, the role of a data entry clerk could be a great fit. Get ready to input, update, and cross-check valuable data to help with efficiency and data integrity.

Importance of Bookkeeping for Independent Contractors

Independent contractors, since they are the sole business owner, are responsible for everything that goes on in the business. If you fall behind, it’s hard to get caught up and easy for something to fall through the cracks. Income and expenses are reported on Form 1040 under Schedule C. In the other states, the program is sponsored by Community Federal Savings Bank, to which we’re a service provider. Trying to figure out the sole proprietorship advantages are? Flexibility, Low startup costs, Financial stability, ease of establishment, and more.

  • Bookkeeping is critical to running a successful business as an independent contractor.
  • She is also experienced in setting up corporations with the State Corporation Commission and the IRS.
  • Interested in being surrounded by delicious smells all day?
  • Bookkeepers manage financial records, but accountants are legally permitted to analyze and provide advice about those records.
  • We’ve listed some of the key differences when it comes to the requirements and job market for each.

It is important to possess sharp logic skills and big-picture problem-solving abilities, as well. While bookkeepers make sure the small pieces fit properly into place, accountants use those small pieces to draw much more significant and broader conclusions. In some cases, a bookkeeper for a business is also an accountant.

Be Honest About Your Earnings and Expenses

The main thing you are doing is keeping all the income and expenses organized. The second part of bookkeeping is, when you’ve tracked the transactions (both income and expenses) now you need to organize them into transaction types. Join over 1 million businesses scanning receipts, creating expense reports, and reclaiming multiple hours every week—with Shoeboxed.

One of the most important tasks for an independent contractor is to track every financial transaction. It’s important to plan for this and set the money aside ahead of time so that the money is available before the tax deadline. Anyone considering a role in customer service will thrive on human interaction, naturally be able to solve problems, and want to make people’s day better, whether it’s online or in-person. As a bonus, it’s also one of the more high-paying contract jobs out there. Becoming a freelance writer is one of the most promising independent contractor careers. In the role, you’ll craft narratives tailored to diverse industries and audiences, inspiring action and conveying stories.

Let’s Get in Touch

We’re interested in talking
about your business.