If you’re an independent contractor, employers don’t have to pay into your health insurance, life insurance, bonuses, stock options, worker’s compensation, unemployment taxes, payroll taxes, or 401 contributions. Independent also don’t get employee benefits, or protection from employment laws, like the Fair Labor Standards Act , the Occupational Safety & Health Act and Title VII of the Civil Rights Act. Independent Contractor Tax Advisors is a licensed CPA firm that provides accounting services and tax advice for contractors, consultants and other self-employed clients across the U.S. Our clients love us because we simplify their lives and put more money in their pockets.

  • Employee classification can be a bit of a gray area—if you’re unsure how you should be classified, consult with a CPA.
  • In the meantime, if you have a copy of your tax return from last year, please upload them in this portal.
  • Thorn, CPA, PLLC know what it takes to keep area businesses profitable.
  • The “independent” in independent contractor simply refers to the fact that the contractor is a non-employee, and is independent of the company they’re doing the contracted work for.

According to U.S. labor law, independent contractors are not employees—they are self-employed and do work for clients on a contract basis. If you do work as an independent contractor, you are technically working for yourself. This is intended to be a basic outline not a complete discussion of what being an independent contractor is. This is meant as a starting point for you to understand how to run your business.

Take the worry out of your working relationship with an independent accounting or bookkeeping contractor

Communications made through the website do not create an attorney-client relationship. Information transmitted to the attorney or through the website may not remain confidential. I started One 8 Solutions 20 years ago as an IT service company, and then morphed it into a client accounting service firm about 10 years ago. Self employed professionals have a number of options for retirement planning including the Simplified Employee Pension Individual Retirement Account , Simple IRA and Solo – 401s. If you are saving for retirement, create a plan that allows you to save the maximum.

Many new small business owners will start by entering all of their bookkeeping on an Excel spreadsheet. The manual labor of entering data into Excel is likely to bring mistakes. The software will automatically take your invoices, payments received, payments returned, and expenses to organize your books.

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In other words, if there is any way for either the accountant for independent contractor government or state government to find your worker is an employee, it is best to classify your worker as an employee. Unfortunately, this isn’t as easy as a BuzzFeed quiz—there’s no clean number that if you answered yes or no to, you’ll get your answer. This will not be a quick option but may be the only way to truly get a definitive answer. Unfortunately, it’s not as easy as just looking at how many hours you work for a company or something black and white like that. In fact, it’s a major gray area that looks at multiple factors related to the nature of your relationship and who has more control in the situation.

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You many not have considered this, but requesting your own EIN or Employer ID Number can greatly benefit you. Instead of just being a «contractor for hire,» becoming your own business provides many tax breaks that you wouldn’t receive otherwise. This can take your annual income and improve it significantly. If you attempt to reconcile your books on your own, it can be a monumental task. Using accounting software like Zero, Wave, or Freshbooks, will allow you to reconcile your bank accounts quickly.

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Failing to file expenses and profit will ultimately lead you to be audited by the IRS. As a contractor, your wages will be heavily scrutinized and it is best to have the most accurate snapshot of your estimated tax payment to avoid being hit with a larger than expected tax liability. Many new independent contractors will start out doing bookkeeping themselves. Cash can be tight early on, so being responsible for your books can help you save some money while starting your business.

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QuickBooks has versions for both Windows and Mac, as well as an online version, which works best for independent contractors. We’ve listed the regular price, but each plan is discounted by 50% for the first three months and each plan offers a 30-day free trial. We reviewed accounting apps on a variety of platforms, for mobile devices and desktop computers alike, so you can assess which features meet your needs as an independent contractor.