As someone who is self-employed, I often feel overwhelmed juggling all the balls in the air and praying that they won’t come crashing down. If you too, feel the same way, there is a way to make sure you’re on top of what’s most important — keeping the IRS happy. After all, money and taxes are the foundation to your business. Not to scare you, but tracking your finances so that you can make filing your self-employed taxes a breeze can mean the difference between carrying on as usual or getting a letter from the IRS (oh no!).
Luckily, there are some tools (some free) that help you track your expenses, get your paperwork in order, and file your taxes. Ready to learn what they are?
If your business involves driving to and from on-site client work or for other business-related purposes, you already know it can be a pain to track all the hours you drive. I mean, are you really going to carry a notebook and pen with you everywhere you go and write down all the miles after looking at Google Maps?
Instead, MileIQ can help you track your mileage automatically. Once you set up the app, it’ll run in the background and track all your miles so all the records are held in one place. To let the app know whether your trip was for personal or business reasons, simply swipe left or right. If you had to pay for parking, tolls, or other driving related expenses, you can enter those details too.
When it comes to tax time, all you have to do is run a report in order to make accurate claims for your business deductions. What’s more you can access this data through the app or on your computer. If you’re accessing it from your computer, you can print your records according to various filters such as by date or business trips.
MileIQ is free for up to 40 drives each month, and starting at $4.99 per month for unlimited trips. The subscription fee counts as a business expense, by the way.
IRS Free File
Yes, you can file your taxes for free!
The IRS Free File Program is a partnership between certain tax preparation companies and the IRS in order to help you file your federal taxes for free online. If you’ve been filing your own taxes, why not take advantage of this free option. Before you use this service, know that not every business qualifies.
If you’re an LLC designated as a S-Corp, you most likely won’t be able to file because these forms aren’t supported. For self-employed folks who file using Schedule C — aka on your personal tax return — you can. That is, as long as your income is $72,000 or less. Those who qualify may even be able to file their state taxes for free.
Using this online program is fairly simple. The IRS website lists all the paperwork you need before you start filing. Afterwards, you’ll be led through a series of guided questions and the program will automatically calculate your tax liability.
Even if you try your best to make sure to run a paperless business, there’s bound to be pieces of paper here and there. Whether they’re paper receipts from business purchases, 1099s or tax receipts, making sure they’re organized and accessible come tax time can be brutal.
Take it from me — as a pretty organized person, even I don’t know where half my paperwork is sometimes because my six year old son loves to snoop around my home office.
You already know that keeping track of this paperwork is important, so let’s get on with why Genius Scan is so great (you thought I was going to say genius there, weren’t you?). This app, available on both Android and iOS, is a PDF scanner. It uses your phone o scan your important documents and stores them in an online database (don’t worry, it’s totally safe).
When you need to access your scans, you can log into the app and share them online or print them. Once you scan with the app, you can keep the hard copy of the document, but there’s no need.
Genius Scan has both a paid and free version, with the paid version offering more space on your cloud storage account.
Even solo business owners hire out for help every once in a while. I know I’ve benefited from many professionals, including proofreaders and audio editors.
If you paid any contractor (or non-employee as the IRS sometimes calls them) at least $600 within a calendar year, you may be obligated to file a 1099-NEC form. What this form does is tell the IRS the exact amount you’ve made in payments for contractors. Your contractors should get a copy of this form as well since they need to declare this income and pay taxes on it.
There are some bookkeeping software options that help you create these forms automatically, but those options can get expensive, fast. Instead, check out Efile1099NOW, which is an IRS-approved e-filer. You simply enter the information for each contractor manually, import it from supported accounting software, or from Microsoft Excel. Once you do so, Efile1099NOW will e-file it to the IRS on your behalf. You can even send an electronic or paper copy to your contractors.
To start, you’ll need to create a free account online. The service fees are very affordable — the more you file, the lower the price becomes. Prices range from $1.05 per 1099 for e-file only to $4.50 if you want to e-file, print and mail the form.
Get It Back Campaign Quarterly Tax Calculator
Figuring out how much to pay in quarterly taxes can be a pain, especially if you’re doing it manually. That’s where this quarterly payments calculator comes in. The Center on Budget and Policy Priorities’ Get It Back Campaign has created this free tool to help you figure out how much to pay each quarter.
To use this tool, simply enter your tax filing status and your estimated annual income. It’ll then pop up an approximate amount you need to pay each quarter. The tool will also provide a link to a more comprehensive calculator to make sure you’re going to pay the right amount.
Filing taxes isn’t the most exciting task in the world, so hopefully these five tools will help save time and hassle. Think about time you’ll save — maybe you can even take a nap in the middle of the workday!