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. 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. You can take advantage of a variety of tax deductions, but you have to document your expenses with receipts and invoices. 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.

An employee will receive wages regularly, have taxes withheld from those wages, have their schedules created by their employer. You are not an independent contractor if you perform services that can be controlled by an employer (what will be done accountant for independent contractor and how it will be done). What matters is that the employer has the legal right to control the details of how the services are performed. Financial Control Consider how much right the worker has to control the economic aspects of their job.

Ways An Accountant Can Help Your Small Business

The software can be an app used on your phone or tablet or one downloaded to your computer. Typically, accounting apps for independent contractors will help with organizing and storing records and receipts, keeping track of accounts payable and accounts receivable, and performing bookkeeping tasks. No one looks forward to tax season, even (especially!?) accountants.

Working with a professional accountant and bookkeeper will help to eliminate much of the stress that comes from being a business owner and helps you stay on track financially. In addition, keeping your books organized will put you in better position if you ever apply for a business loan. We chose QuickBooks because we believe it has the most features, ease-of-use, and pricing that most independent contractors will need. But every contractor is different, so one of the other accounting apps on our list may fit your needs better. Having a clear picture of their financial figures will help any independent contractor understand their business better.

Key Accounting Considerations

An independent contractor is someone who is self-employed and operates their business independently of the business who has hired them. Businesses hire independent contractors to do a specific task or a set of tasks for a period of time. Their work is typically unrelated to the hiring businesses core activities. Employees are not self-employed and have an important, ongoing role in the operations of the business.

Independent contractors are self-employed so they have business risk. They have to generate enough revenue to cover expenses to avoid a loss. Whereas, employees are usually paid a relatively predictable or consistent amount and don’t incur the kind of expenses that could result in a loss because they are not operating a business. We can help with every aspect of your taxes, from ensuring you’re adhering to all the rules pertaining to quarterly estimated tax payments to helping you calculate and justify deductions. If the credits and deductions you’re claiming appear abnormal to the IRS, you might get audited. We can help you understand the steps you need to take to remain complaint while keeping more of your earnings.

SBA Changes PPP Loan Amount Eligibility for Sole Proprietors and Independent Contractors

1099-MISC is an “information filing form” used to report non-salary income to the IRS. You don’t need to do anything to your copy of 1099-MISC, but if you don’t receive one, you should follow up with your client. As is always recommended when drawing up any kind of legal document, both parties can be well served https://www.bookstime.com/ to consult a qualified attorney with experience in independent contractor contracts. They can help with negotiations, but at a minimum they will see to it that the basic requirements of any accounting contract are included. After we’re done with the steps above, it’s time to double check the figures.

Our tax professionals decipher between all of your expenses and determine what tax is deductible or not. We then combine all of your information and prepare all necessary forms and schedules. Above all else, the most significant benefit of utilizing accounting software is creating accuracy and order within your business. Many new small business owners will start by entering all of their bookkeeping on an Excel spreadsheet. The manual labor of entering data into Excel is likely to bring mistakes. The software will automatically take your invoices, payments received, payments returned, and expenses to organize your books.

QBO Accountant Needed

For tax purposes, independent contractors are either considered a single-member limited liability company (LLC) or a sole proprietor. This guide will define the role of an independent contractor, why monthly bookkeeping is so important for independent contractors, and how independent contractors handle their bookkeeping and tax liabilities. To learn more about an independent contractor agreement for an accountant and bookkeeper, you can post your legal need on UpCounsel’s marketplace. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. As a business owner, it’s important to regulate your processes, especially if you are outsourcing accounting tasks.

You can treat anyone working for you as an employee and it will not concern the IRS or your state government as long as you follow the employment rules and laws, and pay all employment taxes due. If you want to treat workers as independent contractors, review the rules and get professional advice to ensure the classification of independent contractor is supportable under both the IRS and your state laws. When you sign on to perform an accounting or bookkeeping job, it’s important that you establish a clear working relationship with the firm that hired you. And, should you ever come under IRS scrutiny, it’s essential that you have a record outlining your status as an independent contractor and not an employee of your client.