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QuickBooks Self-Employed: Get the Most out of your Tax Deductions

Budget Planner

Quickbooks Self-Employed is one of the Best tax Software Options for Freelancers! In arts school I attended a Business class that covered bookkeeping, taxes, and other small business duties. I knew that as a freelance artist I would need to understand how to manage a business. In my class, we completed our bookkeeping manually and used practice spreadsheets to examine profit and loss in our hypothetical businesses. Thankfully, today Quickbooks Self-Employed accurately manages my bookkeeping for me. It’s simple to use because you can track and record your transactions with ease. I currently use and swear by QuickBooks because it makes bookkeeping for freelancers simple!

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What is QuickBooks Self-Employed?

Intuit is a software company that developed TurboTax software. Quickbooks Online is small businesses accounting software and Quickbooks Self-Employed is a simpler version that is designed for sole proprietors such as freelancers.

Check out the Features of QuickBooks Self-Employed!

QuickBooks is perfect for freelancers who need basic bookkeeping tools and tax prep software. If you’re a freelancer like myself, you will love these features. QuickBooks is easy to navigate, their tax prep tools are simple and, it truly suits my needs.

Dashboard

Quickbooks Self-Employed Dashboard
Sarah Stoll / Stollhaus

The QuickBooks interface is easy to navigate. Six charts on the homepage give you a financial overview of your business. The dark sidebar and tabs allow you to access features such as taxes, reports, and more. The first thing you’ll notice is the ‘Profit and loss’ chart on the top right which is key for watching your financial health.

Client portal

Customers can view and pay invoices in the client portal where they can choose their method of payment.

Expense tracking

Simply connect your Paypal, Etsy, Amazon, or your bank account to easily import your transactions. 

Chart of accounts

Keep your finances organized into categories such as income and expenses. QuickBooks doesn’t have a full chart of accounts but the expense categories match the IRS expense and deduction categories which is convenient for filing taxes.

Fixed asset management

Track your business assets as you grow!

Reports

You can generate reports such as a mileage log, profit and loss summary, tax summary, tax details, receipts, and more! To import and export reports, you can easily upload expenses in a .csv file format. Only invoices and reports are eligible for export, so it may be useful to save your receipts and transaction records in a file directly on your computer in addition to tracking them on QuickBooks.

Sales Receipts

Send clients receipts for their purchases with ease!

Tagging

Add tags to transactions to stay organized!

Quickbooks Self-Employed tax checklist
Sarah Stoll / Stollhaus

Tax checklist

A tax checklist can be found in the top-right hand corner of the screen so you can ensure you’re prepared before you file. Tax support even allows you to calculate your estimated taxes and annual tax projection. It supports Schedule Cs and TurboTax integration. Unfortunately there is no state-level tax support yet but Intuit is always improving its software so this feature could be added in the future

Deductions

Track all kinds of expenses including healthcare, home office, supplies, and more. Quickbooks will show you what you’re eligible for so you can maximize your deductions and save money every year.

Track Transactions with Ease!

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QuickBooks Self-Employed is my go to bookkeeping software for tracking my transactions. If you have a business account, you can link your bank account to Quickbooks so your transactions will upload automatically. If you don’t have a business account, I suggest making one at your bank or even creating a PayPal business account. I do not advise adding a mixed use personal checking account because you will need to sort through and delete your personal transactions. If you do add a mixed use account, you can label them as “personal” or “business” and split transactions between categories. Enable automatic categories for your transactions too!

Categorize Your Transactions

The Quickbooks categories feature is advantageous during tax season when you’re trying to figure out which deductions you’re eligible for because all you have to do is scan through your categories and calculate their totals. 

Save your Receipts!

A major aspect of bookkeeping is recording your receipts accurately. In Quickbooks, you can upload your receipts and attach them to your transactions. I prefer to manually enter my transactions so I’m aware of my profit and loss from month to month. Whether you choose to connect your bank account and enable automatic uploads or manually enter your transactions, you should double check your entries for duplicates and even missing transactions. Check your email and bank statements for anything you’ve missed before you submit your return for tax season!

Total Mileage to Max out your Deductions!

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As a freelancer or independent contractor, you may rack up some miles driving to art exhibitions or meetings with clients. I wish I had been aware of just how advantageous tracking miles can be, because at the current rate of $0.56 per mile driven per business trip I could earn $778 in tax deductions, simply by driving down to Maryland for my fine art exhibitions!

If you commute frequently QuickBooks Self-Employed offers the option to automatically track your miles as well. Watch your deductions add up as you clock miles!

Generate Simple Invoices

Quickbooks Self Employed allows you to generate payable invoices online. I found this feature to be very helpful for charging clients for graphic design. You can easily email the invoice to the client from Quickbooks. Bank transactions are free, but credit payments will cost 2.9% plus $.25 service fee. The software will even remember your past invoice information and save contacts for convenience! Additionally, you can add your logo, and create payment reminders. QuickBooks Payments allows you to process credit transactions like Square payment processing. 

I feel Square is more convenient because I can connect it directly to my eCommerce website. To learn more about Square, read my review here! (Coming Soon)

Estimate Quarterly Taxes

On your dashboard in the top right corner you’ll see a date for the deadline of your quarterly taxes. The advantageous aspect of this software is that Quickbooks estimates your quarterly taxes for you. To make the most of this feature, keep your transactions up to date and categorized. Make sure your income is accurate and upload copies of your client’s receipts. 

Labs Let you Integrate even more Accounts and Data

Quickbooks Self-Employed Labs
Sarah Stoll / Stollhaus

Access Labs by clicking the gear icon under ‘About you’ and you will be given the option to enable Amazon account purchase integration and tracking. If you link your Quickbooks and Amazon account, each amazon purchase will be labeled specific to the product you purchased. Under Labs, you can also import mileage from trips tracked by Google Maps and integrate Coinbase transactions. Stay organized by assigning a purpose to each account so you can monitor your business and personal purchases!

This section is worth checking out because integrating your accounts can save the a lot of time!,

Customer Support You can Count on

If needed, you can pay for advice from a real CPA who will help you file your taxes. There is a live chat feature, as well as a contact form, but unfortunately there isn’t a customer service line to speak with a representative. If you have simple questions, the Help Center may help you resolve them.

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QuickBooks Self-Employed Keeps your Data Secure

During the last few years I’ve used Quickbooks, I have never had my Self Employed account compromised by a cyber attack. Personally, I prefer not to connect my bank accounts to Quickbooks, but if you do you can entrust that your financial data will be secure because it uses 128-bit SSL encryption and multi-factor authentication including virus and intrusion protection. Your data is kept secure by firewalls and security testing while stored in multiple data centers by Intuit.

Cloud-based Data Lets you Access QuickBooks from Anywhere

All of your data is saved to the cloud so this software doesn’t require downloads.

Hardware & Software Requirements

As long as you have an internet connection, you will be good to go with this tax software. QuickBook’s cloud-based software allows you to access your data from anywhere. There is even a mobile app you can use on the go.

Accounting Method

QuickBooks Self Employed uses cash basis accounting to calculate taxes but it is not accounting software, it is primarily a tax software with accounting features.

Is QuickBooks Business Size Specific?

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Since QuickBooks Self-Employed is designed for freelancers, independent contractors, and eCommerce business owners, this product is not intended to be scalable because self-employed workers do not need accounting software. Since freelancers mainly need to record their bookkeeping for federal freelance taxes, QuickBooks Self-Employed is equipped with only basic tools. If you plan to expand your business, the regular QuickBooks plan is your best option because you can enroll in a payroll plan for your business so you can manage your accounting by simply logging into the online accounting website! Only one user, and one accountant, can access QuickBooks Self-Employed. Unfortunately if you decide to move, your data cannot be transferred between QuickBooks Self-Employed to QuickBooks Online so move to Quickbooks if you plan on sizing up your business.

If you’re a business owner who needs greater accounting capability, you should visit our software blog to discover more suitable accounting software options.

Ease of Use

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Quickbooks is very easy to use, however there are some features that you may need to upgrade your plan to access. While you can generate tax reports and spreadsheets, you can’t export your bookkeeping data to TurboTax during tax season. I felt frustrated when I had to manually enter and categorize all of my 2020 transactions into TurboTax. Due to this, I upgraded to the QuickBooks Self-Employed Tax Bundle for $25 a month which allows me to export directly to TurboTax. This feature allows you to pay federal quarterly taxes directly through Quickbooks as well.

This tax software allows you to collect and organize your deduction data, so it’s easy to write deductions off of your taxes, plus you won’t miss out on deductions you didn’t know you were eligible for!

Quickbooks vs. Quickbooks Self Employed

Which tax software is right for you? Self-Employed is designed for independent contractors and Quickbooks is intended for small businesses. If you file Schedule C, then you should get the Self-Employed package. If you’re a business entity, 1120, then QuickBooks will suit your needs. This tax software will help you save time and money on taxes because it calculates deductions for you. However, keep in mind that you will need to use another accounting tool or tax software to complete your freelance state taxes.

How much does QuickBooks Self-Employed Cost?

Currently the basic Self-Employed plan is on sale for $15 a month, but you can save 50% off of your first six months starting at $7 a month by subscribing here. There are more advanced plans that bundle greater features too! Check out the Tax bundle option for $25 a month that includes the ability to file online. Don’t forget, you can write off your Quickbooks subscription as a business expense as well!

There are no annual contracts so you can cancel your subscription at any time. If you’re not sure if Quickbooks is right for you, you can try their free 30-day trial and save 50% off of your first six months here.

  • Self-Employed includes the ability to Send invoices, separate expenses into categories, automatic quarterly tax estimates, mileage tracking, and aims to maximize your Schedule C deductions. You can send your information to Turbotax as well.
  • The Self-Employed Tax Bundle includes everything from the regular package with the addition of the ability to pay your quarterly tax estimates online and file your federal and state tax returns. You can also add TurboTax Live at an additional cost.

My Final Review of QuickBooks Self-Employed

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I wouldn’t be nearly as organized as I am now without Quickbooks! Quickbooks helps you review your transactions, and keep all of your data in one place.QuickBooks Self-Employed is well suited for freelancers! From great tax support to helpful accounting tools, you’ll find that you’re prepared for tax season! 

Did you try QuickBooks Self-Employed? Let us know your thoughts in the comments below and don’t forget to subscribe!

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