But every contractor is different, so one of the other accounting apps on our list may fit your needs better. Zoho made our pick as best accounting software for part-time contractors because its basic, free version provides everything most contractors will need–all at no cost. If your part-time business generates more than 1,000 invoices a year, you’ll need to upgrade. But even the Standard version, priced at just $15 per month billed annually, which offers up to 5,000 invoices a year should be enough for most part-timers.
- Under that state test workers should be considered an employee unless three conditions are met, Chen said.
- While there are certain similarities and overlaps between the two, there are distinctions that set these two roles apart.
- Each check has a portion withheld to pay for unemployed benefits, social security, Medicare, and tax obligations.
- The IRS requires that whether claiming miles or actual expenses.
You’ll get monthly financial reports and can rest easy knowing the books are taken care of. Bench doesn’t include accounting, but it does provide the reports and support you need for your accountant to take care of things come tax day. Wave Accounting is a free accounting app that works both online and on your smartphone. While there are charges https://accounting-services.net/the-ultimate-guide-to-bookkeeping-for-independent/ for some extra features like payment processing, payroll, and bookkeeping support, the free starting price point makes it a winner for many independent contractors. Bear in mind that existing businesses will usually have bookkeepers or accountants already so your success rate with these will be less so look for new business start-ups.
How Does Accounting Software for Independent Contractors Work?
That may be tough since the roles and responsibilities may intertwine. If you are interested in becoming an accountant, it may be beneficial to your career to become a certified public accountant (CPA), which has its own exam. Earning this designation is a common goal of many accountants.
- Hiring a professional to take care of the books will give you more time to concentrate on growing your business.
- If you are curious, check out our guide for the details about virtual bookkeeping.
- You only pay for the services you need, without the overhead of a full-time employee.
- You may want to invest in accounting software to help you manage your books if your business grows in complexity.
- For most independent contractors, it will be beneficial to bring in a CPA to at least help during tax season.
- This may include creating a chart of accounts, setting up a system for recording financial transactions, and establishing a process for reconciling bank accounts.
Look for someone who is knowledgeable in accounting principles and practices, and preferably has experience working with independent contractors. They should be familiar with the specific financial challenges that independent contractors face and understand the unique needs of your industry. Ron Walter made the move from business manager at a non-profit to full time gig economy delivery in 2018 to take advantage of the flexibility of self-employment. He applied his thirty years experience managing and owning small businesses to treat his independent contractor role as the business it is.
The 7 Best Accounting Apps for Independent Contractors in 2023
In fact, applying data analytics to the accounting field is an emerging trend in the industry that is expected to have a growing impact in the future. Accounting is a broad term that encompasses multiple different job titles and roles within organizations. There are three main types of accountants—public accountants, management accountants, and government accountants—all of which focus on different aspects of the profession. Bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters. You may also be an ideal bookkeeping candidate if you want a good job with a respectable wage and decent security but may not be looking for a long-term career.
Specialized Skills
While it’s true that working with financial data is a substantial part of the job, accounting is a critical business function that involves much more problem solving than you may think. People often confuse bookkeepers and accountants—and with good reason. While there are certain similarities and overlaps between the two, there are distinctions that set these two roles apart. Bookkeepers don’t necessarily need higher education in order to work in their field while accountants can be more specialized in their training.
Starting a Bookkeeping Business
While it’s not perfect, it is one of the best accounting programs on the market today and sets a high bar for what business money management apps can do. QuickBooks is great for a wide range of businesses from solo freelancers to brick-and-mortar empires. Having a clear picture of their financial figures will help any independent contractor understand their business better. They will be able to pay their taxes to the IRS with more accuracy.
Hiring a professional to take care of the books will give you more time to concentrate on growing your business. This will separate your business transactions from your personal expenses. The flip side is that you don’t have an employer to handle financial aspects such as benefits, taxes, and retirement. To learn more about this, and other bachelor’s degree programs that can propel your accounting career, explore our program pages. Modern accountants should develop an analytical mindset in order to keep up with trends in the industry and remain competitive in the workforce. Accounting is an in-demand career with impressive salaries and job growth to match.
Why is bookkeeping even necessary for independent contractors?
The following analysis compares the education requirements, skills required, typical starting salaries, and job outlooks for accounting and bookkeepers. Accounting software for independent contractors works like other accounting software in that you download the app, create an account, and start entering your data. It will also suggest categories for organization and store everything related to accounting in one place. Most accounting apps can be integrated with other apps such as mobile banking, customer relationship management (CRM), and mileage tracking. FreshBooks is software for business owners and freelancers – not accountants. Its cloud-based accounting software delivers a fresh approach to your finances, enabling you to manage more than just your income and expenses in one place.
Paying taxes and having accurate snapshots of what you are estimated to pay in taxes helps a lot. Paying in your estimated taxes every month or quarter will help you avoid unexpected tax liability. Although independent contractors can resemble ordinary employees, they are actually separate legal entities from the companies for which they work.
