8 Bookkeeping Rules to Live By for Entrepreneurs and Independent Contractors

If you do work as an independent contractor, you are technically working for yourself. Let’s assume that a new company opens its first checking account on June 4 with a deposit of $10,000. During the month of June, the company wrote five checks totaling $5,000. It also made a $2,000 bookkeeping for independent contractors deposit in the bank’s night depository after banking hours on June 30. As a result, the company’s bank account (in its general ledger and referred to as the “books”) as of June 30 shows a balance of $7,000. Independent contractors can be an asset to your company if used effectively.

The employer should keep detailed work records because the IRS could determine that the consultant was actually a paid employee of the company based on the number of hours worked. At Fusion, our CPAs can set up your recordkeeping on QuickBooks and provide bookkeeping services to help you optimize tax-deductible expenses. We help to ensure you are making timely estimated self-employment and federal income taxes to avoid penalties and fees imposed by the IRS. LYFE Accounting has extensive experience in servicing independent contractors.

Choose a method for Accounting

Accounts Junction has worked with multiple clients from all around the world. Their team has individuals who have worked for independent contractor accounting. This can help you to get better organized accounting for independent contractors. Instabooks contractor accounting software and finance app is designed for independent, private, general contractors. Independent contractors, you hire them, they come with their skill set, you don’t control them.

Also, monthly bookkeeping allows you to do this on a more regular basis; you won’t be surprised by anything because your financial record keeping is streamlined. As an independent contractor, U.S. law classifies you as your own business entity. As such, you need to be responsible for more than a payrolled employee in terms of financial record keeping. In contrast, contractors need to handle their own benefits and employment taxes.

Bookkeeping for small construction business

They will be able to reuse the existing data and also update invoices with any new information about products or services provided. This function saves data entry time and improves the probability of getting paid on time. While QuickBooks can’t replace human bookkeeping services, it empowers you to maintain your books more accurately with less effort. When you do hire an expert, they’ll be able to review and reconcile your documentation more quickly, saving you money.

This involves comparing the transactions recorded in your bookkeeping system with the transactions recorded by your bank. Reconciling your bank accounts regularly can help ensure that your financial records are accurate and up-to-date. Filing taxes as an independent contractor can be a complex process, but it is an important part of your bookkeeping efforts. It is important to accurately report your taxable income and any deductions and credits you are eligible for.

Are you an independent contractor?

When you compensate them, you’re compensating them for their hourly rate that’s agreed upon ahead of time and the number of hours and it’s a gross payment. At the end of the year, you would issue a 1099 to an unincorporated independent contractor. People think that if you just hire somebody for a day or week or as a casual … they’re just an independent contractor. It really boils down to a lengthy checklist from the IRS where you have to evaluate control.

• ScanWriter assists with automated data entry directly into QuickBooks, including 100s of transactions from bank and credit card statements, bills, sales orders and invoices.
• 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.
• Tracking the money you bring in and the money you send out of your account is essential as an independent contractor.
• Depending on your plans for using QuickBooks, Better Bookkeepers will train you accordingly.

And the last thing you want to do is find yourself sifting through a box of unorganized receipts every quarter. Tallie can help you manage your receipts as you create them–and syncs directly with QuickBooks Online for seamless data management. 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. Independent contractors may sometimes seem like another employee, but they are a completely different business entity than the businesses they perform work for.

Independent Contractor or Full Time Employee? Bookkeeping Tips and Strategies

In addition to the scope of our services and the tailored approach we take to bookkeeping, there are several other factors that make us the right choice. As is always recommended when drawing up any kind of legal document, both parties can be well served 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. But, if an unusual transaction shows up, they may ask you to categorize it in the Bench app. You should expect to spend less than one hour per month categorizing stray transactions.

Finding and utilizing the programs that meet your needs will help make you a successful indepedent contractor. This means the business owner is responsible for withholding and reporting a certain portion of the wages earned by the employee. These withholding’s are the employees tax liability, social security, medicare and unemployment taxes in each pay check. At the end of the year, the total taxable income must be proven with the W-2 form filed before the annual deadline in April. Though this may seem obvious at first glance, separating your personal expenses and business expenses as a contractor can get complicated quickly. This separation goes beyond using one card for business expenses and another for personal expenses.