When I ditched my W2 job to freelance full time, QuickBooks Self-Employed was the only way I knew how and when to pay my taxes

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When I ditched my W2 job to freelance full time, QuickBooks Self-Employed was the only way I knew how and when to pay my taxes
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When I quit my W2 job to freelance full time, it was scary in the best way possible. With one exception: taxes. Figuring out how to do my taxes as a freelancer was daunting. Not to mention I needed to meticulously track all expenses and income for the first time.

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I started with PayPal invoicing, a separate checking account, and a spreadsheet I'd use to generate a profit and loss statement and track my income. When the first round of quarterly taxes was coming due, I quickly realized that doing all my own tracking was taking up way too much of my time. Time that could be spent working on client projects.

Like most new freelancers, I wasn't ready to hire an accountant to help me yet, but I needed to make this part of running my business easier. A friend of mine suggested I try out QuickBooks Self-Employed, so I signed up for the 30-day free trial and quickly realized I could say goodbye to time-consuming manual data entry forever.

Tracking business transactions only requires a few clicks every week

QuickBooks Self-Employed is a program that combines tax software and cloud-based accounting tools. It automatically tracks my income and expenses and estimates my quarterly tax payments.

I started by connecting all of my business accounts in one place - my checking account, PayPal account, and business credit cards all linked up. Next, I reviewed all of my transactions and marked them as business or personal. I definitely had a few lattes and dinner dates that needed to be marked as personal.

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From here, I focused on the business transactions and selected exactly what category the transaction fell into for tax purposes. Some common categories for me are:

  • Income
  • Estimated taxes
  • Transfers
  • Apps/software/web services
  • Legal and professional services

I spent a few hours digging through every single transaction and making sure they were categorized properly.

Sign up for QuickBooks Self-Employed today if you run your own business »

If I had made a business purchase with cash or on a personal card, QuickBooks made it easy for me to account for it. I simply snapped a photo of the receipt and dropped it into the system. You can also add transactions manually if needed.

The last step was to create a few rules for things like my Adobe Suite subscription for design work. Every time I am charged for this business expense, QuickBooks automatically categorizes it for me.

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After the initial set up, now it only takes me a couple of minutes each week to go through my transactions. I can even do it from my phone - the QuickBooks Self-Employed app is user-friendly and easy to navigate.

I opted for the tax bundle for the convenience

There are a couple of plans you can pick from with QuickBooks Self-Employed. The first is the regular self-employment plan, which allows me to track and categorize expenses and income, keep track of all my Schedule C deductions, send invoices, and receive automatically calculated quarterly tax estimates. That last feature is truly worth it for me to know exactly what I need to send over to the IRS every quarter.

The second option is the QuickBooks Self-Employed Tax Bundle, which includes all of the above and two more handy features: I can pay my quarterly estimated taxes straight from the QuickBooks portal, and I have easy access to TurboTax, including one state and one federal return when it's tax time.

These additions were too good for me to pass up, so I picked this subscription. It costs $12 per month for the first three months. There's also a third plan that includes help from a CPA, but I don't think I'm quite there yet.

To pay my quarterly taxes through the QuickBooks portal, I had to connect to my Electronic Federal Tax Payment System (EFTPS) and designate the account I wanted the money to come from. This process was also relatively painless and I had it set up within 15 minutes.

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QuickBooks sends me a reminder a week or so before taxes are due and I can log in to pay. It follows up with a receipt and keeps a record of the payment.

Everything is done within a few clicks, and having my taxes sorted out feels like such a relief.

QuickBooks Self-Employed is simple, not robust

It's not all rainbows and roses when it comes to this cloud-based accounting software. Here are my two major complaints:

  • The invoicing system is limited. I can't set up recurring invoices or schedule invoices for a future date
  • QuickBooks doesn't offer any way to manage clients. I still track all client work, including projects and hours, on a separate spreadsheet

That said, it's a simple system that's saved me time and addressed my concerns about filing taxes as a freelancer. Having my tax summary report, all Schedule C deductions, and my estimated quarterly taxes done is exactly what I need.

If you're a sole proprietor/LLC like me, then QuickBooks Self-Employed could be the perfect solution to getting organized and ready to file your taxes this year.

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Let QuickBooks Self-Employed help you on Tax Day 2020. Sign up today »

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