A few years ago when my dad did my taxes, it was kind of a mess. Sure scanning my 1099s, W-2s, and other forms to send to him in Arizona was simple enough, but when it came time to talk deductions, I was ill prepared. While I did make efforts to find old e-mails or dig up receipts from throughout the year, it was clear I could be a lot better organized with the whole thing and potentially save more as a result.
Shortly after getting through that, I decided to sign-up for Quickbooks Self-Employed (or QBSE, for the sake of this article) to see if that could help make tax time a bit easier the next go round. Now, two years later and having just completed my latest return, I can tell you that it certainly did make a difference. With that, here’s a quick look at Quickbooks Self-Employed and how it has helped me to save money the past few years.
What is Quickbooks Self-Employed?
Even if you don’t recognize the name offhand, there’s a good chance you’ve at least heard of an Intuit product. The company is behind the TurboTax software you’ve likely seen on Costco displays each spring as well as their Quickbooks
suite meant to aid small businesses with accounting. In that same vein, Quickbooks Self-Employed is a pared-down version of Quickbooks Online (from what I’ve been told) specifically aimed at sole proprietors like myself.
Getting Started With Quickbooks
To me, the most useful element of QBSE is the ability to keep track of all your transactions. This is accomplished by first linking your bank accounts and credit cards to Quickbooks. Doing so will then allow you to go through all of your transactions — incoming and outgoing — and label them as “personal” or “business.” Furthermore, if it is business, you can select more specific categories that will come in handy when figuring out your tax deductions. You can also split transaction amounts between personal and/or as many business categories as you want and in whatever manner you choose.
One particularly cool feature related to transactions is Quickbooks’ integration with Amazon. Instead of your purchases merely being labeled as “Amazon” like they normally would, linking your Amazon account to QBSE will allow you to see what items were included in each shipment. From there you can also label individual items in your order as “business” or “personal” without having to calculate the split yourself.
You can either use the website or the app to go through your transactions. In fact, doing so on mobile provided an almost Tinder-like experience as you can swipe right to mark a purchase as “personal” and left for “business.” In either medium you can also set up rules so that future (and even existing) transactions of that nature will automatically be categorized for you.
Another helpful element is the ability to attach digital copies of receipts to any transaction. This is achieved by simply taking a picture of said receipt or forwarding confirmation e-mails to a Quickbooks from a linked e-mail account. Honestly this was a feature that I haven’t made much use of just yet but it’s one I probably should start taking advantage of moving forward.
I will offer one word of warning, however, and that is that you may want to double check all of your business transactions even if they’re already be categorized manually or via a rule. That’s because there have been a handful of instances where I’ve spotted duplicate transactions displaying in my expenses. Obviously this could throw off your deduction calculations so it’s important to exclude these rogue clones. Luckily that part is easy enough to take care of — but I do wish this didn’t happen in the first place.
You can see for yourself how easy Quickbooks is to use in my video reviews below:
While I don’t have a job that requires a lot of driving (my typical commute is the 20 feet from my bed to the next room where my home office is), Quickbooks Self-Employed opened my eyes to how lucrative tracking your business mileage can be. In case you don’t know, the current rate is $0.58 per mile driven for business. That means that my road trip to Tulsa to cover an event for another website earned me more than $200 in deductions.
If you do drive a lot, the QBSE app also offers an auto-tracking option. Although I haven’t used this feature to a great extent, I have experimented with it a few times and it does seem pretty helpful — and it definitely comes in handy for people like me who forget to check their odometer until it’s too late.
Of course you can always add your miles manually along with a description of what the travel was for, including start and end points.
On that note, one slight annoyance I’ve found with QBSE’s mileage entry is that you don’t seem to be able to duplicate a trip easily. This came into play when I was logging several days of drives to last year’s FinCon Expo and would have loved to simply copy the trip and change the date. Instead I had to manually enter everything — including the addresses — over and over. I will say this process was slightly better on the app where QBSE would pull data from Google Maps to help autofill the addresses but it still wasn’t as easy as I believe it could be. The moral of the story is, if you’re going to be claiming a lot of business mileage, make sure to try to the auto-tracking feature.
Another useful feature for freelancing is Quickbooks’ invoicing section. Not only does QBSE offer the ability to generate and track invoices but you can also sign up to make those invoices payable online. If you do sign up for that option, bank transfer transactions are free, although credit card payments will cost you 2.9% plus $.25. That might not exactly be ideal but it’s also not terrible.
Tax Estimates and More
Now onto the reason I bought the software in the first place. In addition to the extremely useful transaction classifications and mileage tracking that come into play around tax time, Quickbooks Self-Employed also helps you estimate your quarterly taxes. To do that, you’ll want to set up your tax profile, keep up to date on categorizing your transactions, and be sure to include your business income. Of course it should be noted that QBSE only offers federal quarterly tax estimates so, if your state collects income tax and also requires estimated quarterly payments, you’ll still need to calculate those on your own. Meanwhile, for those of you who are unsure if you need to be paying quarterly taxes, Jonathan Dyer actually has an insightful article on that very topic that I recommend.
This is also where another minor annoyance with the basic QBSE comes in. Although you can generate some helpful tax reports including a spreadsheet of your different expenses and deductions, I was unable to find a way to export that data in a format that my father could plug into TurboTax. Additionally, there is a way to invite your accountant to access your books but, at this time, I’m unsure if that means that they’d be able to export the TurboTax file or not.
Doing some poking around, I found that this problem may be solved by upgrading to the Quickbooks Self-Employed Tax Bundle, which runs for $7 more a month. This package not only allows you to export a Schedule C to TurboTax but also enables you to pay your federal quarterly taxes through QBSE (although you’ll still need to sign-up for EFTPS in order to do so). Finally the tax bundle also includes one federal and one state tax return filing. For the record I intend on testing out the Tax Bundle upgrade this tax season so be sure to check back for that review. Plus, even without the bundle, you can easily print off payment vouchers for your quarterly taxes, which saves me the hassle of tracking down such forms when mailing in my payments.
Despite not utilizing the bundle upgrade, this past year I actually managed to do my own taxes (thanks to Credit Karma Tax) and it also seemed to go well. The reports that I was able to export from Quickbooks allowed me to easily plug in my deduction numbers, although I will say that some didn’t seem to properly line up, so I had to pay extra attention. Still, it did make things much easier than they would have been otherwise.
To me, this is where the software really paid for itself. Instead of fumbling for receipts or trying to brainstorm other items I was entitled to write off, I was able to easily provide all of my deduction data, which added up to be quite a substantial amount. Better yet I remember that, after my first round of taxes following my QBSE subscription, my dad even told me how impressed he was with my organization. Even in my 30s, that still feels nice.
Quickbooks Self-Employed Cost
Quickbooks Self-Employed can be accessed through their website and/or their helpful mobile app. A monthly subscription for the service retails for $10 a month, but they do sometimes offer sales. For example, at the time of this publication, they are offering the first 3 months for 50% off. Additionally, the Tax Bundle option retails for $17 regularly is also often discounted to $12 a month for a trial period. Incidentally you can actually write off your subscription as a business expense, which feels awesomely meta to be honest.
Final Review on Quickbooks Self-Employed
Having now gone through the whole tax process solo, I can honestly say I wouldn’t have been nearly as successful had I not invested in Quickbooks Self-Employed — it’s not a commercial, it’s just true. While I can’t say for sure how much I saved as a direct result of the software, I can tell you anecdotally that there were plenty of business transactions I came across I wouldn’t have given a second thought to had the software not brought them to my attention. Additionally, I’ve now learned just how helpful it is to have all of your business expense data in one place along with invoice tracking. In that aspect, while I mostly use it to help with my taxes, this could also be an important tool for freelancers looking to keep better track of their finances.
Having now gone through the whole tax process solo and staring down the barrel of another one, I can honestly say I wouldn’t have been nearly as successful had I not invested in Quickbooks Self-Employed — it’s not a commercial, it’s just true. While I can’t say for sure how much I saved as a direct result of the software, I can tell you anecdotally that there were plenty of business transactions I came across I wouldn’t have given a second thought to had the software not brought them to my attention. Additionally, I’ve now learned just how helpful it is to have all of your business expense data in one place. In that aspect, while I mostly use it to help with my taxes, this could also be an important tool for freelancers looking to keep better track of their finances overall.
This article was first published on Dyer News.