The bookkeeping process for self-employed individuals is similar to the bookkeeping process for small businesses with a few key differences. Whether you are a small business owner or a self-employed individual, the main part of the bookkeeping process is tracking your income and expenses. This process will show you whether you are making a profit or losing money and will give you an idea of how to improve your bottom line.
One key difference in the bookkeeping process is if you own a small business, you are probably utilizing a payroll service and tracking your payroll expenses, while on the other hand, if you are self-employed, you are tracking and calculating your estimated quarterly taxes. When you are self-employed, you have to figure out how much taxes to pay, including social security and Medicaid taxes, as they aren’t automatically deducted from anything. Another difference is if you are self-employed, you may need to track your mileage, depending on your profession (such as an Uber driver or Instacart shopper). This information is especially important when tax season arrives to be able to deduct everything you can. Both small business owners and self-employed individuals alike must stay on top of their bookkeeping in order to remain successful.