This is an informational form that must be submitted to the IRS in order to report non-salary income. You should contact your client again if they fail to provide you a Form 1099-MISC. One of the schedules on your Form 1040, Individual Income Tax Return, will be a Schedule SE. You should figure up your total self-employment income and loss using the Schedule C portion of Form 1040’s line 31 before completing your SE.

Recording Income and Expenses

• On average, freelance bookkeepers charge lower rates than firms do, since they have less overhead.
• Remote bookkeeping services typically charge a flat monthly fee, based on how much time it will take to complete your books every month.
• But as an independent contractor, you might not have understood how crucial it is to make sure you stay on top of your bookkeeping and accounting.
• However, you may not have realized how important it is to make sure you keep up on bookkeeping and accounting as an independent contractor.
• One big difference between being an employee and being a contractor is what you get paid for.
• Reach out to your business contacts, friends, or family members who have experience with bookkeeping services.

A great bookkeeper will not only manage your books but also provide valuable financial insights. They should help you understand your financial statements and point out trends that could impact your business. Cloud-based solutions offer real-time access to financial data from anywhere.

Experience

Getting paid to your personal account can be too tempting to sweep it under the rug. While there are short-term benefits, like not paying taxes on that money, it is construction bookkeeping not worth being caught during an audit. If you are not diligent in separating your personal and business bank accounts, you might get paid directly to your personal account. Since some bookkeeping firms also employ accountants, they may be able to handle your tax filing—and other accountant duties—in-house.

Years of Experience

Recording payments and deposits are an important part of bookkeeping for independent contractors. This includes tracking clients’ payments and any deposits made into your business bank account. This information is critical for managing cash flow and preparing tax returns. While many contractors manage their finances, it’s always advisable to seek professional assistance when needed.

Familiarity with Accounting Software

Typically, it’s more expensive to hire a firm than a freelance bookkeeper, since firms have higher overhead to cover. Even if your bookkeeper is insured against errors and omissions, you—or your business—are on the hook in case of errors. The effect of incorrect books could range from misinformed business decisions on your part, to misreported taxes (and the resulting IRS penalties) on the part of your business. The time a bookkeeper puts into your business is determined by how many transactions you process per month, whether you have employees, and how complex your industry is. Your company may be growing, and you’re having trouble keeping track of your finances. Or you may be thinking about selling your business https://azbigmedia.com/real-estate/commercial-real-estate/construction/how-to-leverage-construction-bookkeeping-to-streamline-financial-control/ down the line, and know you need immaculate books to do so.

However, since many of my readers are bookkeepers, you may have spotted the other issue. Assuming your rules don’t prevent it, there are situations when using a contractor always makes more sense. There are certain situations where the answer is obvious or has been chosen for you.

Monitor Cash Flow Regularly:

That’s why it’s important to find a bookkeeper who knows what they’re doing. However, expertise is not only measured by years of operation, or by third-party certifications. Learn how to build, read, and use financial statements for your business so you can make more informed decisions.

• Many new independent contractors will begin by handling their own bookkeeping.
• Look for someone with the right experience and qualifications, but also someone who communicates well and fits with your company culture.
• Quick responses to our queries show that they are reliable and dedicated.
• It is advantageous to have everything separated in the event of an audit, especially if you consider yourself to be a business.
• You probably chose to work independently because you wanted to escape the routine weekday or because you possessed a specialty that companies sought after.
• They can provide honest feedback and share their experiences, helping you make a more informed decision.

• No matter how big or small your business is, you must keep track of every expense.
• 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.
• If a remote bookkeeping service is worth hiring, they ought to be able to guarantee a certain level of quality.
• I used the example above to explain where people can make flawed assumptions.
• This scenario shows that financially, it’s cheaper to outsource.
• Reviewing your books regularly is important to stay on top of your bookkeeping.

It will be advantageous for the majority of independent contractors to hire a CPA at the very least to assist throughout tax season. It provides you with a clearer picture of the state and direction of your company at the moment. For most independent contractors, it will be beneficial to bring in a CPA to at least help during tax season. 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. It gives you a more transparent look into where your business is right now and how it is trending.