QuickBooks Self-Employed has several useful tools to help you file your tax return, calculate your estimated tax payments, track your information during the year, and plan ahead. For most independent contractors, this will give you everything you need if you take the time to understand everything QuickBooks self-employed offers.
If you do need extra help, you can export everything in your QuickBooks Self-Employed file to give to your accountant.
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
Key Features in QuickBooks Self-Employed
QuickBooks Self-Employed has several key features to help you manage your taxes and your business as a whole.
- Automatically import your transactions from your business bank accounts and credit cards.
- Categorize your transactions into business and personal.
- Categorize your business transactions according to tax expense categories.
- Enter your miles for the standard mileage deduction or automatically track them with the mobile app.
- Taxes page to calculate your quarterly tax payments and project your income for the year.
- Discounted pricing on TurboTax or export your transactions. You can also enter the information from your Profit and Loss Report or Tax Summary on your Schedule C.
Two Things to Think About Before Using QuickBooks Self-Employed for Taxes
QuickBooks self-employed tax estimates are based on what you put in.
The QuickBooks Self-Employed tax estimates may or may not be accurate because they depend entirely on the numbers you put in. This is more than just entering the right numbers (which are probably right if you use automatic imports). You need to make sure everything is in the right category as well.
Some expenses are fully deductible, such as rent for a separate office, while others may not be, such as a cellphone line you use for both business and personal purposes. If you enter vehicle expenses, you need to make sure the standard mileage deduction does not cover them if you’re claiming that. Meals are another example where the rules are complicated on when they’re deductible, and deductible meals are only 50% deductible.
In short, you need to know what you’re doing. If you know how to complete your own tax return, you can use QuickBooks Self-Employed as a tool to complete your return throughout the year. If you don’t know how to do your own taxes, you may not have everything categorized properly, so you can’t just plug the QuickBooks reports into your tax preparation software.
I’ve also found that when you’re using the estimated taxes payment features, it overestimates your tax liability. The reason is it doesn’t account for your tax deductions and credits. Some of these it can’t know like your child tax credits or whether you get a health insurance credit or deduction. It also doesn’t account for the qualified business income deduction or the deduction for one half of your self-employment taxes.
Do you need an accountant to do your taxes when you use QuickBooks self-employed?
The answer to this question depends on a few things.
- Do you just not want to deal with it?
- Do you want to take the time it will take to learn how to do it?
- Will you be disciplined about keeping things up-to-date during the year?
- How confident are you in your understanding of tax law and your ability to complete your tax return accurately?
Depending on your level of comfort and how you feel about doing things yourself, your accountant can help you with:
- An initial consultation to explain how things work and to set up QuickBooks.
- Ongoing help either doing everything for you, checking things every month or quarter, or being available for questions.
- Getting your QuickBooks file tax ready and using it to file your return.
If you think you might need help, it’s better to plan ahead and get things right the first time by meeting with an accountant early in the year than to pay busy season rush rates to have an accountant try to fix things on April 15th.