There are a lot of perks when it comes to owning and running your own business, but one area that I’ve always struggled with is the finance/accounting portion of the job. Let’s just say the creative side of me would rather work an 80 hour week than deal with accounting, taxes, sales taxes, etc. When I became self-employed over five years ago (holy moly I can’t believe it has been that long!), I didn’t know what went into the accounting portion of the job. The first few years I quickly figured out that I needed to pay WAY more taxes and I need to find a system that worked for me. Insert Quickbooks Self-Employed.
When I converted EVERYTHING over to Quickbooks Self-Employed my entire work life became easier when it came to billing clients, tracking payments, capturing receipts, categorizing expenses – basically the whole enchilada. I get questions from readers and friends about how I deal with finances on a weekly basis and thought it I’d share a few helpful tips on how I’ve been able to make my finance life easier on myself.
1. Create a Business Account
First order of business is to open up a business checking and saving account in order to keep everything organized. This helps me out a lot when it comes to tracking what expenses are business verse personal. You don’t want to get the two mixed up.
2. Track Your Income Through Quickbooks Self-Employed
Why I didn’t do this right away with my business? I started using Quickbooks Self-Employed after running my business with an excel spreadsheet for two years. When I switched to Quickbooks Self-Employed it was like day and night. You can link your bank accounts, PayPal, file 1099s, and more. Each month I go through to track my income, expenses, what invoices have been paid, and what payments are overdue. It’s made the entire process that much sweeter.
Since I’m running the blog and design business it became difficult to track when payments were due – net 30, net 60, direct deposit, etc. Now, whenever I sign a contract for a new campaign I immediately put together an invoice in Quickbooks Self-Employed. With design clients it’s essential to have an organized invoicing system in place since we are purchasing pieces for them. What’s also amazing – Quickbooks Self-Employed tracks the sales tax that is owed to the state. This is quite essential in the design industry.
3. Put Aside a Percentage of Each Payment for Taxes
Being self-employed means nothing is taken out of the income I receive – no taxes or 401K contribution. With that being said, it’s my responsibility to put a percentage aside from everything I make each year. At the beginning I was HORRIBLE at putting anything aside for taxes. I thought to myself – man, I have all of this money coming in and then taxes hit me like a brick wall. Fast forward to learning my lesson and I put a percentage of each payment away for taxes. My husband and I basically sit down each year to forecast how much I’ll be making and then decide that we should put aside about 30-35% of my income. In the end, this will lower any amount that you owe. This helps you with not getting hit with a HUGE amount of taxes that are due in April.
4. Be On Top of Your Tax Payment Schedule
Knowing what your tax payment schedule is vital. I add these into my calendar each year so that I don’t miss any payments. When I first started the business it was bi-annual but now I pay each quarter, which always seems to creep up on me. Believe me, making these payments is essential. If you don’t think you are paying enough each quarter or every six months, pay a little more. It’ll help lighten up that tax payment come April or you may even get money back!
5. Start Prepping Your Annual Taxes Early
Each year we seem to get better and better about prepping our taxes earlier. Of course, we usually end up turning them in by early February but it takes a while to get everything together. Luckily, when it comes to filing Quickbooks Self-Employed has everything in order for us to file. You just want to make sure you have everything organized and accounted for – your income, expenses, did you make any donations? Do you have contract workers (if so, then you need to send out 1099’s) – Quickbooks has everything organized in your account to make it as easy as it can get.
So, whether you’ve already filed your 2016 taxes, asked for an extension, or are deciding how you want to start tracking your finances I highly recommend signing up for Quickbooks Self-Employed – to help you make your accounting life easier. It’s saved me year after year!
This post is a partnership with Quickbooks Self-Employed. All opinions are my own. Thanks for supporting sponsored posts that keep Sacramento Street doors open.
Photos by Andrea Posadas for Sacramento Street