Independent Contractors: Everything You Need to Know Bench Accounting

Hiring a professional to take care of your bookkeeping services will allow you the freedom you need to grow your business as an independent contractor. Unlike employee wages, which you’ll handle through your payroll, you pay your independent contractors like you would any other kind of supplier, via your accounts payable system. 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.

While some other advanced programs feel like they require an accounting degree to navigate, FreshBooks keeps it simple. Independent contractors may sometimes seem like another employee, but they are a completely different business entity than the businesses they perform work for. Independent contractors need to be thinking of bank account reconciliation.

Staff Accountant WFH (Employee or Independent Contractor)

Even Quickbooks requires you to use TurboTax for an extra fee if you want your taxes done in the same place. It is the most expensive service on this list, but includes everything you need to run your basic business administration without lifting https://www.bookstime.com/articles/accountant-for-independent-contractors a finger. If you’re a freelancer and want simple accounting with a focus on your needs, FreshBooks is a solid choice. If you have more than five clients, you’ll need the Plus version, but all of the plan tiers are reasonably priced.

You many not have considered this, but requesting your own EIN or Employer ID Number can greatly benefit you. Instead of just being a “contractor for hire,” becoming your own business provides many tax breaks that you wouldn’t receive otherwise. If you’re just starting out or only have a few clients, then start with a basic version of accounting software that is less expensive.

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Below are seven great ways to become more successful as an independent contractor. Third-party customer reviews are mostly positive for Xero, but some customers note that the pricing has consistently increased for the accounting services. However, it is highly beneficial to create your Employer ID Number. There are many tax benefits and saving that come along with having a business entity. Tracking the money you bring in and the money you send out of your account is essential as an independent contractor. Proper bookkeeping will help you set up financial reports that let your plan and make educated decisions for the future.

• If your firm ever comes under IRS scrutiny, it’s important that you have documentation establishing the status of each of the independent contractors (“ICs”) you’ve hired.
• We have reasonable rates which you will find on our Business Formation page.
• We discuss all the applications below along with a link to each website and the coupon code for MileIQ you can use anytime you like.
• One of the main reasons why it’s better to have accurate financial records is to have a guide with your next move either as an independent contractor or as a business entity.
• Getting paid to your personal account can be too tempting to sweep it under the rug.
• Remember that as an independent contractor, you’ll have to set aside all of your self-employment taxes, Social Security, and Medicare contributions yourself.

The costs of accounting software for independent contractors vary. There are free and paid versions, and typically the paid versions https://www.bookstime.com/ have more features. Some apps offer free 30-day trial periods and others offer discounts for paying annually in advance.

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Both mileage trackers are great, however MileIQ gets the nod for being better. We discuss all the applications below along with a link to each website and the coupon code for MileIQ you can use anytime you like. Wave Apps only charges for credit card processing, online bank payments from your customers and payroll.