As a freelancer, managing your finances can be practically a full time job in and of itself. Freelancing affords you the independence and flexibility of executing your project but it also has inherent challenges to managing your finances. That is where QuickBooks comes in to make things simpler. QuickBooks for freelancers offers easy to use features that help you to track income, send invoices and even prepare for tax season all in one place. In this blog, we explain QuickBooks, key features and why freelancers need QuickBooks in detail.
What are QuickBooks?
QuickBooks is an easy to use accounting software designed to help freelancers to manage their finances. It tracks income and expenses, generates invoices and simplifies tax preparation. By organizing your financial data in one place, QuickBooks saves your time and helps you on the stay of your business without the stress of manual tracking.
Which Version of QuickBooks is Ideal for Freelancers?
If you want to choose the version of QuickBooks for freelancers there are two options here: QuickBooks self-employed vs QuickBooks Online.
QuickBooks Self-Employed
It is the best option for freelancers with simple needs. QuickBooks self-employed is easy to use and affordable, which helps you to track income, expenses, invoices and tax. It is ideal for sole proprietors and independent contractors.
QuickBooks Online
It is the best option for freelancers with complex needs. QuickBooks Online offers extra features like time track, custom reports and project management. The best option for freelancers wanting to expand their business and already have a few clients.
Key Features of QuickBooks for Freelancers
Here is a simple explanation of a key feature of QuickBooks for freelancers which is mentioned below.
- Easy Expense Tracking: QuickBooks automatically tracks and categorizes your expenses. It keeps everything organized, so that you do not worry about keeping receipts or manually data entry which saves time and effort.
- Tax Assistance: QuickBooks helps to track deductible expenses and makes tax season less stressful. It also estimates quarterly taxes, so that you are always prepared.
- Invoicing: Easily create a professional invoice in minutes with QuickBooks. You should include your logo and customize your invoices for payment terms or customer reminders, as well as simplifying gaining faster payments.
- Financial Reports: QuickBooks can create clear financial reports that will help you understand your profits and losses.
- Mobile Access: As a freelancer, you can access most of your financial information using the QuickBooks mobile app (anytime and anywhere).
- Time Tracking: This feature is best for freelancers who charge by the hour and calculate accurate work. QuickBooks provide inbuilt time tracking features which track your billable hours.
Why Freelancers need QuickBooks?
As a freelancer, managing your finances should be difficult. Here are some points explaining why freelancers need QuickBooks.
- QuickBooks helps track business expenses, so you did not miss potential tax deductions.
- QuickBooks automates much of the manual entry that you had to do before, instead of spending hours on manual data entry.
- It automatically tracks your income and expenses, which is not only less stressful for tax time, but gives you better accuracy.
- You will be able to create and send professional invoices easily that get you paid quicker.
Steps to Set Up QuickBooks for Freelancers
Here are the instructions for setting up QuickBooks for freelancers.
Step 1: Sign Up into QuickBooks
Go to the QuickBooks website and create an account. Select the type of account suitable for your business: QuickBooks self-employed or online.
Step 2: Customize Your Profile
Once you sign up then fill in your details such as business name, email and other basic information. You should set up your business logo and customize invoice templates.
Step 3: Link Your Bank Account
Connect your bank and credit card account into QuickBooks and it will automatically import transactions.
Step 4: Create Categories for Expenses
Create categories for different types of expenses like office supplies, travel and it helps track where your money is going.
Step 5: Add Clients and Projects
Input your clients and set up any active projects that help you keep track of invoices and payments, and keep organized.
Step 6: Set Up tax Settings
Configure tax setting for easier tax preparation and estimation. You make sure to input your tax preference like sales tax rates or quarterly tax estimates.
Step 7: Start Tracking and Invoicing
After all the process you are ready to start adding income, record expenses and send invoices to clients. QuickBooks will automatically update your financial data.
QuickBooks vs Other Tools for Freelancers
Here are some other accounting tools for freelancers which we mentioned below.
- FreshBooks: It is great for freelancers who mainly need invoicing and time tracking. FreshBooks is a user-friendly interface and ideal for service-based freelancers. It provides less features according to QuickBooks like deep tax support and in-depth financial reports.
- ZohoBooks: A cost-effective tool for invoicing, expense tracking and project management. ZohoBooks is ideal for freelancers who want a simple solution without the high cost.
- Xero: It is another solid accounting toll that is known for its clear interface and easy to use features. Xero is best for freelancers who need a simple solution to manage their finances.
Common QuickBooks Mistakes Freelancers Make
Here are some common QuickBooks mistakes freelancers make which are explained below.
- Not categorizing expenses correctly.
- Forget to track time or expenses.
- Not run regular reports.
- Ignore tax settings.
- Mixing personal and business expenses.
- Not back up data.
Conclusion
In conclusion, we hope this blog helps you to know about QuickBooks for freelancers. QuickBooks is a powerful tool that helps freelancers manage their finances with ease. By using QuickBooks, you can focus more on your work, it simplifies the process invoicing and expense tracking to tax preparation or saves your valuable time.