For 1099 employees, it’s important to have a solid understanding of the laws that govern your tax obligations. You may have heard that you can’t claim any deductions on your taxes, but there are actually some tax deductions that are available for 1099 workers.
Here are the best apps for 1099 employees:
Best Apps For 1099 Employees
The Balance Small Business
STARTING A BUSINESS
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Best Accounting Apps for Independent Contractors
Bookkeeping apps for all your business needs
BY ERIC ROSENBERG Updated on March 24, 2022
FACT CHECKED BY SAMANTHA YADRON
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If you are an independent contractor, you are considered a business in the eyes of the law. And as a business, you have to do business bookkeeping and taxes. While that may sound overwhelming, the right app can help you handle all of your accounting needs. From free online and mobile options to more expensive desktop platforms, there are many different kinds of accounting apps to choose from. So how do you know where to start?
First, consider the kinds of features you need. Do you pay yourself a biweekly paycheck, or submit your own quarterly taxes to the government? Do you have any business assets or inventory to track? Are invoicing and payments a necessity? There are comprehensive programs that can tackle most or all of these needs, but they may be a bit more expensive. It’s good to note that the cost of these apps can vary — some have monthly fees, others have a one-time fee, and we’ve also included one in this list that is free to use.
Another thing to consider is your accounting app’s integration capabilities. Some integrate with a wide range of tools to track expenses, hours, miles, receipts, and other metrics for your business. If you rely on any specific tools or CRMs, make sure they integrate with the app you choose.
We’ve also included accounting apps on a variety of platforms, for mobile devices and desktop computers alike, so you’ll want to think about where and how you’ll need to access your bookkeeping information. With those things in mind, read on for our list of the best accounting apps for independent contractors.
The 8 Best Accounting Apps for Independent Contractors in 2022
Best Overall: Quickbooks
Runner-Up, Best Overall: Xero
Best Free: Wave Accounting
Best for Freelancers: Freshbooks
Best for Part-Time Contractors and Side Hustles: Zoho Books
Best Full-Service App: Bench
Best for Automatic Invoicing: GoDaddy Bookkeeping
Best for Combined Bookkeeping and Tax Prep: inDinero
Best Accounting Apps for Independent Contractors
What Is Accounting Software For Independent Contractors?
How Does Accounting Software For Independent Contractors Work?
How Much Does Accounting Software For Independent Contractors Cost?
Is Accounting Software For Independent Contractors Worth The Cost?
Who Should Use Accounting Software For Independent Contractors?
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Intuit’s Quickbooks is the best-known accounting app for good reason. While it’s not perfect, it is the best accounting program 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.
This program is the standard for small business accounting, and it offers much more than an independent contractor probably needs. But, that said, it also includes everything an independent contractor may ever need. That includes live bank connections, invoicing, payment processing, and mobile apps.
Quickbooks has versions for both Windows and Mac, as well as an online version (which is best for independent contractors). There is both a self-employed version and full version that should both sufficiently handle your business needs. Quickbooks Self-Employed plans start at $7.50 per month and go up to $17 for the Live Tax Bundle which includes live assistance from CPAs.
RUNNER-UP, BEST OVERALL
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Xero is a top competitor to Quickbooks and offers a wide range of features starting at $11 per month for the Starter version, going up to $62 per month for the Premium version. The Starter version should be sufficient for most freelancers, through any payroll needs require the $32 Standard version.
All Xero plans include financial reports, mobile apps, more than 1,000 integrations, live bank account connections, invoicing, and access for multiple team members. Xero customers also get free access to the Xero Projects app, which is an accounting project management app, for no extra charge at this time. This is perfect for hourly and project-based billing.
You will still need an external tax app or accountant, but all of your bookkeeping needs are covered. Billing and expense forms, double-entry accounting, inventory tracking, document management, and CRM integrations are just a few features that make Xero worth serious consideration for any independent contractor.
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Wave Accounting is a free accounting app that works both online and on your smartphone. While there are charges for some extra features like payment processing and payroll, the free starting price point makes it a winner for many independent contractors.
The free version is pretty impressive, even compared to some paid accounting apps. It includes invoicing, live bank connections, income and expense tracking, and collaborators. It even has the ability to track multiple businesses (like a “side hustle” or two) and personal finances in the same account.
Paid add-on services include online ACH and credit card processing and payroll. But these cost more than some competitors, so if you process a lot of payments you may end up paying more with Wave’s “free” accounting than you would with a paid app.
BEST FOR FREELANCERS
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If you are a freelancer and want simple accounting with a focus on your needs, Freshbooks is a leading choice. This app is ideal for the self-employed and starts at $6 per month after a 30-day trial. If you have more than five clients, you’ll need the Plus version at $15 per month or the Premium version for unlimited clients. Save 10% by paying annually instead of monthly. Additional team members cost $10 per month each.
Features include invoicing, expenses, time tracking, projects, estimates, payments, reporting, and a mobile app. It is one of the easiest accounting systems to use. While some other advanced programs feel like they require an accounting degree to navigate, Freshbooks keeps it simple.
BEST FOR PART-TIME CONTRACTORS AND SIDE HUSTLES
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Zoho offers a suite of email, CRM, a custom app engine, and an accounting package. The accounting side, Zoho Books, is free in the basic version, which should be plenty for most independent contractors.
Zoho Books includes accounting needs like bank reconciliations, invoicing, expense tracking, timesheets, projects, recurring transactions, and sales approvals. Bill management requires upgrading to the Standard version at $15 per month or $180 per year.
Zoho Books does quite a bit, but does not scale up for larger businesses like some of the more popular accounting packages. It should work fine for independent contractors and side hustlers alike.
BEST FULL-SERVICE APP
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Bench is an accountant and an accounting app in one offering two packages. The Essential package, which focuses on bookkeeping, costs $299 per month (or $249/month if billed annually). The Premium plan includes everything from the Essential plan as well as tax advisory and tax filing services for $499 per month. (or $399/month if billed annually). While it costs more than most others on this list, it includes one big feature the others don’t: a human accountant.
Included in the monthly fee is a team of bookkeepers to monitor your connected financial accounts and keep the books up to date. Whenever you want, you can log in and view statements and reports that you need to run your business.
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.
Bench offers a free trial for both of its plans so you can give them a try before committing.
BEST FOR AUTOMATIC INVOICING
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If you work with one client every month and send the same fixed-rate invoice, you shouldn’t have to worry about spending hours and hours on bookkeeping tasks — or repeating the same invoice process, again and again, every month. With GoDaddy Bookkeeping (formerly “Outright”) that recurring process is automatic.
GoDaddy Bookkeeping is one of the best accounting apps for e-commerce sellers, but it offers plenty of features to cover independent contractors as well. It includes both web and mobile access and starts at a very low $5 per month (when billed annually) for a basic version that includes invoices, estimates, payments, mileage, and time tracking.
If you want more than current-year business reports, however, you’ll need the essentials or premium versions that run $10 per month and $15 per month respectively.
BEST FOR COMBINED BOOKKEEPING AND TAX PREP
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inDinero is a full-service accounting software with accounting and tax preparation service in one. Like Bench, there is a human element to the service that begins at $300 per month (billed annually).
This is the one-stop-shop for accounting and tax in one place. Even Quickbooks requires you to use TurboTax for an extra fee if you want your taxes done in the same place. It is the most expensive service on this list, but includes everything you need to run your basic business administration without lifting a finger.
What Is Accounting Software for Independent Contractors?
Accounting software for independent contractors is accounting software that is geared toward independent contractors rather than big companies. The software can be an app used on your phone or tablet or one downloaded to your computer. Typically, accounting apps for independent contractors will help with organizing and storing records and receipts, keeping track of accounts payable and accounts receivable, and performing bookkeeping tasks.
How Does Accounting Software for Independent Contractors Work?
Accounting software for independent contractors works like other accounting software in that you download the app, create an account, and start entering your data. The app will do the calculations for you. 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.
Some helpful accounting app features include:
Tracking multiple businesses
How Much Does Accounting Software for Independent Contractors Cost?
The costs of accounting software for independent contractors vary. There are free and paid versions, and typically the paid versions have more features. Some apps offer free 30-day trial periods and others offer discounts for paying annually in advance. Typically, expect to spend anywhere from $4.50 per month for a basic version with a limited number of clients to $300 per month for more custom options with 50 clients, connected bank accounts, and live customer service.
Is Accounting Software for Independent Contractors Worth the Cost?
Accounting software for independent contractors is worth the cost. An independent contractor is responsible for their own accounting and bookkeeping, as well as tax preparation and deadlines. Using an accounting app will save you time and money and help you keep track of how much money is coming in and how much is going out.
If you’re just starting out or only have a few clients, then start with a basic version of accounting software that is less expensive. You can always upgrade to a version with more features once your business grows.
Who Should Use Accounting Software for Independent Contractors?
It’s a good idea for all independent contractors to use accounting software. You could be a new independent contractor with just a few clients or be an established contractor with more than 50 clients—either way, you’ll benefit from the features that accounting apps offer. Accounting apps can be used in addition to the help of a CPA or even in place of a CPA if you’re comfortable doing your taxes yourself.
How We Chose the Best Accounting Apps for Independent Contractors
There are so many accounting apps on the market. We narrowed them down to the top eight after reviewing the most popular ones. We chose these as our best accounting apps for independent contractors based on their functions, features, and integrations. We also looked at their pricing, number of versions offered, and whether they tailor the app to the specific needs of independent contractors.
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Best Free Apps for Self-Employed Freelancers
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By Marsha Kelly
February 11, 2022
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Being a self-employed individual means that you have to keep track of all your daily financial records for business and tax purposes.
Money is the backbone of your business – no matter if you are a freelancer, solopreneur or a consultant.
As such, being able to track both your incoming sales and outgoing expenses is vital to the health and longevity of your business.
Smartphones and tablets are an invaluable resource to manage your business effectively on your mobile phone. Using the best apps makes keeping track of your daily financial records much easier.
For instance, smart devices allow you to access a host of mobile apps that allow you to access your files from any internet connected device. You can even contact your clients from wherever you are – even the beach!
To lessen the burden of running your business, consider using some of the available technologies and apps. Below is a list of the best apps for self-employed people.
Best Free Apps for Self Employed and Freelancers
QuickBooks Self-Employed App
This recommended app is specially designed to help self-employed individuals that have several income sources from different clients invoice, manage and get paid via the mobile app. Read my Quickbooks app review
This is because such individuals have tax returns that are a bit complicated because of the many income sources and different type of business expenditures.
The QuickBooks Self-Employed app provides an easy way to charge customers credit cards with the Intuit Gopayment, file all your business receipts, and export all your tax deduction conveniently from your mobile phone. Startups, small businesses, and solopreneurs can also take payments offline with this mobile credit card reader.
The app is available in both Android devices and iPhones version, and you can also have the Quickbooks Self Employed Online software at an affordable monthly fee. Learn more at the Quickbooks Online reviews
Image to Word Converter
Imagine you have an image of a document you would like to edit. Normally, you would open MS Word, retype the text from the image and then edit it and save like that. What would you say if we told you that there is a better, faster way to accomplish that?
With Image to Word Converter, you can take a picture of your invoice, contract or report and the app will do its magic and convert it to editable MS Word document. It is as simple as that. You can also upload images from your phone, Gmail attachments or supported cloud services (iCloud, Dropbox, Google Drive and more).
The app is developed by Cometdocs, an online document management service, and it is available both on iOS and Android. You should definitely check it out in case you deal with a lot of documents in a paper form.
Genius Scan App
Whether it is an important letter or a tax receipt, losing it can be a nightmare in the life of an entrepreneur.
Keeping an important business transaction document safe is essential because it allows you to keep track of your transactions and the overall growth of your business.
The Genius Scan app allows you to scan these documents into your mobile phone or tablet so that they can be stored in a safe online database in pdf format – for easy online sharing and printing. Download versions available for both Android or Apple iOS.
With it, you will have a digital copy of the document in addition to the physical copy of the same. Or you can throw away the paper copy and only retain the digital copy because you can always print a hard copy if it is needed. Plus the app maker includes a cloud storage account amount with the purchase of app and you can easily upgrade for more space.
Keeping track of your daily expenses can be tedious, especially when your freelancing involves lots of traveling.
This app – MoneyPenny– will help you to keep track of all your daily expenses. With it, you, as a consultant, will be able to track which client you worked for, expenses you can claim on your taxes or bill the client, and any other information that you might want to keep. For the self-employed, your time is your valuable inventory so managing it right is crucial to your bottom line profits.
If it is not enough, you can combine it with Brookson to make requesting payments easy. I like that this app can be upgraded to the Connect full money management system which includes features such as email invoices, job estimates, expense and time tracking, and project management.
Download versions available for both Android or Apple iOS.
Turbotax Mobile App
The Turbotax app is very convenient, and fast when it comes to filing simple tax returns. Most people can file their business tax returns in less than fifteen minutes!
The app allows you to take pictures of your tax forms and then upload them directly into the mobile tax app.
The app is great not only for self-employed persons but also for freelancers. It also allows you to access tax professionals in case you have queries related to your tax filing.
The app is free for both Android and iPhone, however, there is a small fee to file your taxes electronically with the app for federal and state tax returns starting at $39.99
With the highly advancing business world, business transactions are progressively becoming paperless each day. Besides the influx of paperless transactions, it is also added work to constantly print out, sign, and then scan all your important business documents.
HelloSign app allows you to sign all your paperwork electronically without stress. Moreover, it enables you to add watermarks to your signature so that you can just add it to the next business transaction automatically.
FreshBooks Cloud Accounting App
This FreshBooks app can be used in a wide range of ways. It will allow you to create client invoices, take pictures of your receipts, keep track of payments, and handle client information in a simple manner.
Moreover, it can print your monthly reports and review your financial expenditures, incomes, and other processes that are important to your business. The app also allows you to synchronize it with other popular apps and tools like PayPal, MileIQ, and Stripe. It can be used by all Android and iPhone users with a FreshBooks account.
Money Dashboard Mobile App
Often self-employed and freelancers frequently transfer their money between personal bank accounts and business accounts to keep tabs on their financial progress.
The Money Dashboard can offer a great way of keeping an eye on all your business and personal bank accounts while reviewing your overall financial state.
GoDaddy Bookkeeping App
Formerly known as Outright, this bookkeeping mobile app is ideal for most self-employed persons, small business entrepreneurs, and freelancers alike.
Because it organizes all your financial records into one central place and links up any of your accounts from credit cards, PayPal, Amazon, bank accounts, and eBay among others. It also keeps track of your profits, expenses, and clients with charts and graphs.
The app keeps you up to date on your profit and loss information, routinely computes your quarterly tax returns and auto-fills your Schedule C tax form. With this mobile app, you will be able to work on important business undertakings like building client relationships while developing your business because your financial operations are well organized with this app.
The best reasons for using mobile apps when you are self-employed is to simplify your small business management, lessen the tax filing process, and enjoy full control of your financial income and expenditures.
Most importantly, these apps will help you organize your business finances better and allow you to concentrate on developing your small business into a more profitable venture.
Let us know your thoughts in the comment section below.