Bonsai
With the number of small businesses on the rise and the blow-up of e-commerce in the last decade, it’s now possible for almost anyone to start their own business. Doing so requires many things to be juggled at the same time, and as a business owner, you must stay on top of them all. Keeping track of your self-employed accounting is one that can easily get overlooked.
64% of business owners do their own bookkeeping. But this has always been a dark cloud hanging over business owners’ heads because it can feel so complex and difficult.
Not to worry, this accounting for self-employed professionals guide will lay out everything you need to know and make it easy for you to manage all of your accounting on your own.
Most important practices for self-employed accounting
- Keep accurate records: This is the most important practice you should follow when it comes to accounting for self-employed professionals. You must keep accurate records of all of your financial transactions. This includes receipts, invoices, and bank statements.
Accurate records will make it easier for you to understand your financial situation and make informed decisions about your business.
- Track all expenses: As a self-employed individual, it is important to track all of your expenses. This will help you to make sure that you are taking advantage of all of the deductions that you are entitled to. You should also keep a log of your mileage if you use your car for business purposes.
- Separate business and personal finances: This is a must. You should never mix your business and personal finances. It is important to have separate bank accounts and credit cards for your business and personal finances.
This will help you to keep track of your business expenses and help you to identify which expenses are deductible.
That’s not all…
- Have a budget: A budget is essential for any business. It will help you to keep track of your expenses and make sure that you are staying within your allotted expenses. Having a budget will also help you to identify areas where you can save money.
- Invoice on a regular basis: Invoicing on a regular basis is essential for any business. You must make sure that you are invoicing for all of your services and that you are sending invoices promptly. This will ensure that you receive payments on time and will make it easier for you to manage your cash flow.
- Use tools to help with accounting activities: There are many different software programs available to help you with your accounting. A lot of these programs can be limited or overly complex, but some are complete and easy to use.
Financial records to keep in mind when self-employed
- 1099 forms: If you are self-employed, it is important to keep track of the income you have earned. This includes salary, dividends, or any other income you have earned. The 1099 form is used to report non-employment income, such as self-employment income, rental income, or winnings from gambling.
- Schedule C (Form 1040): Schedule C is used to report losses and profits. It is also where you may list any business-related expenses. Freelancers will need to calculate the cost of goods, gross profits, and expenses to fill out this form correctly. This includes income from freelancing, consulting, and other self-employed activity.
This form should be filled out carefully and accurately to ensure that you are reporting your income and expenses correctly.
- Federal Form W-9: The W-9 form is used to provide your taxpayer identification number to a business or payer. You must complete this form if you are a self-employed individual or a business owner.
As a freelancer, you will probably have to send a copy to each customer and seller with whom you contract, so be sure to keep them handy.
What Is Accounting Software for Self-Employed Business Owners?
Accounting software for self-employed business owners is software that does various accounting and bookkeeping tasks. It stores a business’s financial data, is often used to perform business transactions, and is a great way to keep track of your finances.
It helps you keep your books organized and track your income, expenses, and other financial transactions. Some software also makes your taxes easier by estimating quarterly expenses and maximizing write-offs.
These can be especially helpful if you are running multiple businesses, as they will help you keep track of each business’s finances separately.
Why Do Self-Employed People Need Accounting Software?
Good software is crucial for efficient accounting for self-employed individuals. This is true for many of the same reasons that any business needs it, namely financial management and tracking.
It helps you to monitor your sales, expenses, and profits in order to make sure you’re staying on top of your business’s financial health.
When it comes to accounting for self-employed professionals, you need to ensure that your software is able to help manage your invoicing processes, track payments and generate financial reports. This will give you a better understanding of your finances, enabling you to make better decisions for your business.
What are the benefits of accounting tools?
There are many benefits for businesses to utilize accounting tools and software – however, they don’t all lead down yellow-brick roads. There are a lot of tools out there that are subpar. Many are very limited in their capabilities, overcomplicated, or have high barriers to entry.
It’s crucial to find a tool that works well for your business needs but is also easy to use and not limited in its capabilities. That’s why Bonsai is simply the best accounting software for self-employed people.
Bonsai allows simple, streamlined accounting for self-employed professionals. Do less work and spend less time with your nose buried in your books while you enjoy all these benefits of Bonsai:
- Integrated and Automated: Bonsai seamlessly automates and integrates all financial activities, including accounting, taxes, and even banking.
- All-in-one platform: Bonsai comes fully loaded as it’s specially designed by accounting professionals. Proposals, contracts, invoices, forms, CRM, and more are all included so you can spend your time and money on what you genuinely want, growing your business! In addition, they offer hundreds of free fully customizable, and legally vetted templates for contracts, proposals, forms, and other documents.
- Makes Taxes Stress Free: Download your Schedule C and tax write-offs in minutes. Use our unique bonsai tax software to track expenses, maximize tax write-offs, and estimate quarterly taxes – plus, receive reminders for your upcoming estimated tax payments.
Use Bonsai and keep a pulse on your business finances with income reports, expense tracking, automated invoicing, quarterly & annual tax reminders, estimates, and write-offs. Manage your finances, save on taxes, and get paid faster – all in one place.
Conclusion
Although it may have seemed overwhelming in the past, now you have all of the information you need to tackle your own accounting for your business.
Running your business will often feel like a juggling act. You’ll constantly be changing hats between owner, operator, administrator, customer service, and accountant. Remember how valuable your time is.
Stop spending it on tasks that could get done much faster and more efficiently with the right help. Free up some of your valuable time by utilizing a complete program like Bonsai, which offers everything you need to streamline your accounting and take your business to the next level.
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Svitlana Popovska
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