Accounting Tips to Live By: 3 Things Contractors Need to Remember

Bookkeeper trying to balance a sheet

Jumping headfirst into the world of freelancing or entrepreneurship can be a challenge if you are not prepared. While you may already know the passion or profession you are pursuing, one of the biggest practical worries involves accounting.

Whether you are an independent entrepreneur or a beginner freelancer, these tips will help make sure your books are in order.

Separate business from personal bookkeeping

It’s easy to mix up the money for the company and your personal spending when you are just starting out. It’s best to separate the finances and spending for personal and professional.

This means having a checking account and a credit card you can use solely for the business. A separate account also helps in managing additional employees’ or contractors’ payroll when the company grows.

Keep paperwork of expenses

Compared to when you were only an employee, a big change would be the need to keep receipts. These important financial documents can actually help in lightening your payments for taxes.

Accounting expert Equinox Business Solutions states that this important tip for accounting for independent contractors is not limited to receipts; you can use even invoices for tax deductions.

Differentiate employees from independent contractors

Once your entrepreneurial endeavor grows, you’ll likely get more people and hence, manage more finances. When getting services for accounting for independent contractors, the first step is to know if you’re looking to add an employee or hire a contractor.

Even small business can have employees, and this means your accounting for that worker’s filings will include withholding taxes, income taxes, and remittance to Social Security, among others. Know how this will benefit your company then consult with a professional on how to resolve the worker’s accounting.

Taking the plunge in freelancing does not have to be too daunting, so long as you know the basics of what you need to accomplish. Don’t hesitate to get a professional to manage your books so you can focus on growing your business.