Tax time doesn’t have to grind you up and spit you out. This year, use FreshBooks to triumph at tax time.
Burning the midnight oil trying to make sense of the dollars and cents? This year can be different: Tax time doesn’t have to grind you up and spit you out. Instead, use FreshBooks to triumph at tax time.
Here’s a handy guide on how to use FreshBooks in preparation for tax filing season.
Step 1: Track Your Income
Still invoicing with Word or Excel? It can mean a scramble at tax time for all those invoices. That amazing folder structure you had? Suddenly you realize there are missing invoices, and you have to scroll back through e-mails to find copies of them. Instead, track all your income with accounting software. It ensures you have a complete view of how much money your business has earned—at tax time and any time.
Track Invoice Income
If you send invoices through FreshBooks, you’ve already got a head start on knowing your invoice income. They’re all kept in one place and you can easily view a history of the invoices you sent last year.
If you realize there was work you forgot to invoice for, or that you accepted payment for without generating an invoice, you can easily whip one up now.
Tip: If you need to add taxes to your invoices, you can add taxes on each invoice. If you’re not sure how to do that, read our FAQ.
Track Other Income
For many business owners, there’s non-invoice income to keep track of as well. Maybe you’re a photographer who also sells images through a stock image service, and they pay you royalties directly. Or you could be a design blogger who also collects affiliate payments from Amazon and other retailers. In these cases, you don’t necessarily invoice your payees.
This is called “Other Income.” And (lucky you!) you can track it in FreshBooks too. As tax time approaches, ensure you’ve tracked all sources of income in FreshBooks for the complete picture of how much you’re earning. This includes things that may not have been invoiced.
Track all your different sources of income in Other Income. Remember that your taxable income includes invoices and other income: For example, Patreon, Shopify, Etsy, social media ad revenue, and even rent collected from tenants for rental properties that are part of your business. Learn more here!
Make Sure Your Received Payments Are Captured
Tracking your invoices is an important step. But it’s not really “income” until you get paid. So you also want to make sure you’re tracking all the payments you’ve received. Whether it’s online payment, check or e-transfer, make sure your invoice payment status is accurate at tax time.
Look through your outstanding or overdue invoices and make sure they’re really outstanding. If they were paid, you can easily log the payment now.
Tip: You can easily find all outstanding payments by searching for “overdue” or “outstanding” invoices. And if you’d like to make sure clients get reminders when they haven’t paid their invoices, read our FAQ that shows you how.
Step 2: Track Your Expenses
Income is just one side of the story. Just as you monitor the dollars coming in, you also need to see the dollars going out. ThisContinue reading