Question for Independent Contractors

[wanderer03]

How do you do your bookkeeping? Do you setup a spreadsheet or do you use Quickbooks? I was thinking of developing a mobile solution to include being able to scan receipts to help with organization.

 

[Rayner]

How do you do your bookkeeping? Do you setup a spreadsheet or do you use Quickbooks? I was thinking of developing a mobile solution to include being able to scan receipts to help with organization.

What little bookkeeping I do keep track it on a spreadsheets.

 

[Judge]

Just a thought. You might also consider attempting to find a local chapter of "SCORE". A free small business assistance/advice operation.

https://www.score.org/

 

[Crossbreed]

I just use Quicken for all personal AND business activities. I have my regular activities automated via on-line banking. I have no employees, so payroll isn't an issue.

 

[clg114]

I am old and old fashion, so all of my records are handwritten spreadsheets and files. But in my case it is just me, no employees. So keeping track of things is very simple. I am not very computer savy, so I do not use any of the many programs available. I would not recommend doing it this way, use your computer.

 

[paloftoon]

How do you do your bookkeeping? Do you setup a spreadsheet or do you use Quickbooks? I was thinking of developing a mobile solution to include being able to scan receipts to help with organization.

Quicken and Quickbooks have a learning curve, and if you don't have any accounting background, this can be very overwhelming. Stick with Excel. Or if you're making oodles of money, but need help managing, might be worth looking for some kind of accountant that you can trust. Since you're in PA, I might know someone if that situation ever occurs. You'd have to feel comfortable PMing your phone number and e-mail address though.

 

[Crossbreed]

Quicken and Quickbooks have a learning curve, and if you don't have any accounting background, this can be very overwhelming...

Quicken is more geared to bookkeeping, the same activity for which you are proposing to use Excel. Quickbooks is geared more toward accounting. The latter is more necessary when you have employees and/or maintain an inventory of product.

Quicken is simple enough when neither of those is true.

 

[jayk]

How do you do your bookkeeping? Do you setup a spreadsheet or do you use Quickbooks? I was thinking of developing a mobile solution to include being able to scan receipts to help with organization.

I use CSV (comma separated values), without the commas and do my calculations in shell scripts -- never have to worry about upgrades. There is an app on Android that does what you described but it is too complicated for my purpose and difficult to integrate with my system, and from the review, it doesn't seem like it can read off the numbers accurately.

 

[Marmot]

I've been doing contract work as my exclusive employment means for 12 years now and have never needed anything more powerful than a couple of tabs in an excel spreadsheet. Once you grow in size from an independent contractor or LLC into a C-Corp it gets crazy complicated, but if you're just a single person, contracting & keeping track of a bunch of 1099 stuff it's fairly simple...... My advice: Stay small / Stay simple / Don't employ anyone else !

 

[wanderer03]

I've been doing contract work as my exclusive employment means for 12 years now and have never needed anything more powerful than a couple of tabs in an excel spreadsheet. Once you grow in size from an independent contractor or LLC into a C-Corp it gets crazy complicated, but if you're just a single person, contracting & keeping track of a bunch of 1099 stuff it's fairly simple...... My advice: Stay small / Stay simple / Don't employ anyone else !

I'm not planning on ever growing bigger than an LLC and your advice is sound. I just want the legal protections of the LLC. How do you estimate your quarterly taxes?

 

[Cali Cat]

Having been a bookkeeper all my working years prior to self-employment, I just set up my own system on Excel. I only have one other independent contractor to whom I pay a percentage of the fees, so I have no employee issues with which to deal. I typically have an account do my income taxes, and just provide him with all the information from my own books. It's not that expensive, and I'd rather have him answer any questions that might come up afterwards.

 

[wanderer03]

Having been a bookkeeper all my working years prior to self-employment, I just set up my own system on Excel. I only have one other independent contractor to whom I pay a percentage of the fees, so I have no employee issues with which to deal. I typically have an account do my income taxes, and just provide him with all the information from my own books. It's not that expensive, and I'd rather have him answer any questions that might come up afterwards.

Would you be willing to share a blank version of your Excel setup?

 

[Cali Cat]

Would you be willing to share a blank version of your Excel setup?

You know, I wouldn't mind, but I don't think it would be much use to you. It's highly specific to my industry.

 

[wanderer03]

You know, I wouldn't mind, but I don't think it would be much use to you. It's highly specific to my industry.

Oh okay. I need something transportation-oriented. Thank you anyhow.

 

[Ronin82]

I just keep my mileage logs on Excel spreadsheets and keep my check stubs in a file. Really easy, but taxes suck.

 

[Rayner]

Oh okay. I need something transportation-oriented. Thank you anyhow.

Could you draw something up that might work? I'm a big fan of pen and paper bookkeeping? My moleskin sketch book is what use for bookkeeping and everything else I record. My pocket sized note pad is a bit small for that sort of thing.

 

[Marmot]

How do you estimate your quarterly taxes?

Ahh, the great paradox of contracting: The only way to 'correctly' do this is to know for sure (on January 1st) the exact amount of money you'll make during that entire year, crunch the tax bracket that it fits into, calculate your total liability and then divide that by 4 making equal quarterly payments...... The government doesn't seem to care if you make all your money at the start or end of the year as they assume it's evenly & perfectly dispersed and want their cut given to them as such or there's penalties & very complicated interest calculations. Unless I overpay & get a refund, I've never once been able to do this perfectly and/or not get something thrown at me, but it's usually a minuscule amount and not worth arguing over, so here's the formula I use: Every quarter take what you've made to date, multiply by 20% (less what you've already sent in) and that's your quarterly estimated taxes. The key is just to send them 'something' even if you haven't made much yet or anticipate making more later on in the year. This way the compounding interest doesn't pile up too much.

 

[wanderer03]

Ahh, the great paradox of contracting: The only way to 'correctly' do this is to know for sure (on January 1st) the exact amount of money you'll make during that entire year, crunch the tax bracket that it fits into, calculate your total liability and then divide that by 4 making equal quarterly payments...... The government doesn't seem to care if you make all your money at the start or end of the year as they assume it's evenly & perfectly dispersed and want their cut given to them as such or there's penalties & very complicated interest calculations. Unless I overpay & get a refund, I've never once been able to do this perfectly and/or not get something thrown at me, but it's usually a minuscule amount and not worth arguing over, so here's the formula I use: Every quarter take what you've made to date, multiply by 20% (less what you've already sent in) and that's your quarterly estimated taxes. The key is just to send them 'something' even if you haven't made much yet or anticipate making more later on in the year. This way the compounding interest doesn't pile up too much.

So then your deductions come at the end of the year? As a trucker, I'm going to have many: fuel, tolls, maintenance, per diem for meals, vehicle mileage, etc. Golly the IRS makes things challenging!

 

[Marmot]

So then your deductions come at the end of the year? As a trucker, I'm going to have many: fuel, tolls, maintenance, per diem for meals, vehicle mileage, etc. Golly the IRS makes things challenging!

You are now over my head as my itemized deductions do not exceed what I can claim as a standard deduction, so I just take the latter and am done with it, but to paraphrase what I said prior: In order to nail it perfectly without over paying and getting a refund or underpaying and getting a minute penalty, you would have to (and I say this jokingly because it's impossible) know to the exact penny how much you're going to make over the course of the entire calendar year, as well as how much you're going to deduct over the course of the entire calendar year on January 1st......... Add it all up, crunch it, divide by four and then make equal installment payments.

-Does that sound crazy / stupid / un-logical or what ??

 

[shinyedge]

I am seeing a bit of misinformation here that I want to clear up. First, business expenses are different from itemized deductions. Business income and expenses are reported on Schedule C. You only pay tax on your business profit, which is your income minus your business-related expenses. All of the expenses are deductible, even if you have a net loss, and there is no standard deduction.

Second, the IRS allows exceptions to the rule that estimated taxes have to be paid in equal amounts. If you have the records to show that more of your income came in one quarter than in others, you can pay estimated taxes corresponding to that income. It is a separate form you have to fill out at tax time.

Also, you can be very wrong about your estimated income, and there is no penalty if your withholdings and estimated taxes are at least as much as your total tax liability for the previous year. If you don't know how much you are going to make, it might be easiest to estimate your tax to be equal to last year's total. The drawbacks are that, if you have a really good year, you could wind up owing a lot at tax time--but with no penalty. And if you have a bad year you might overpay and get a big refund--but if you realize you are overpaying or underpaying you can adjust your estimated tax payments.

I use Quicken for personal and business expenses. That's good enough for an independent contractor with no employees--Quickbooks would be overkill, although it does help if you have a lot of clients and need to create invoices and keep track of whether your clients have paid. Quicken is a lot easier to learn than Quickbooks. But I don't think either will help you track your mileage. You could use an Excel spreadsheet for that. Or, if you want a low-tech method, you might look at a Franklin Day Planner. The last page for each month has a chart for recording daily mileage, gas, meals, lodging, and other business expenses.