<p>As a small business owner, you always want to do what's best for your business. This includes making the perfect hires, selecting the right vendors, and choosing the best person to do your taxes. But which is best for your business, a CPA or a tax preparer?<br /><br />Use this blog as your guide to understanding what a CPA and tax preparer is, how they differ, and why you should choose one over the other for your unique tax situation. Using a tax professional can save you thousands annually, so selecting the right person or team is essential.&nbsp;</p>
<h2>What is a CPA?</h2>
<p>Certified public accountants, or CPAs, are often used by businesses and individuals for preparing taxes. They have unlimited practice rights, meaning CPAs can address all tax matters with the IRS, regardless of whom they represent.<br /><br />CPAs can only practice in the states they are licensed in and can provide additional tax-related services, such as long-term planning and audit protection.&nbsp;</p>
<h3>CPA certifications</h3>
<p>CPAs must pass the Uniform CPA Examination, complete a study in accounting at a college or university, and meet the experience and good character requirements established by their respective boards of accountancy. CPAs also comply with ethical requirements and complete specified levels of continuing education to maintain an active license.&nbsp;</p>
<h2>What is a tax preparer?</h2>
<p>Anyone can be a paid tax preparer if they possess an IRS Preparer Tax Identification Number. Tax preparers can have different skill sets, education, and expertise.<br /><br />Licensed tax preparers are required to pass the Special Enrollment Examination and complete 72 hours of continuing education every three years. Once all requirements are met, tax preparers become enrolled agents.</p>
<h3>Tax preparer certifications</h3>
<p>Tax preparers with an active preparer tax identification number but no professional credentials are authorized to prepare tax returns. Unlike CPAs, they have no authority to represent their clients before the IRS.&nbsp;</p>
<h2>Main Differences between a CPA and Tax Preparer</h2>
<div class="rte-table-container">
  <table>
    <thead>
      <tr class="table-data-container">
        <td></td>
        <td class="cell-0">CPA</td>
        <td class="cell-0">Tax Preparer</td>
      </tr>
    </thead>
    <tbody>
      <tr class="table-data-container">
        <td>Educational Requirements</td>
        <td>Bachelor's degree. 150 hours focusing on accounting and business<br /><br />Uniform CPA Exam&nbsp;</td>
        <td>No college degree required<br /><br /><br />Special Enrollment Examination&nbsp;</td>
      </tr>
      <tr class="table-data-container">
        <td>Professional Experience&nbsp;</td>
        <td>One to two years&nbsp;</td>
        <td>None</td>
      </tr>
      <tr class="table-data-container">
        <td>Continuing Education&nbsp;</td>
        <td>40 hours per year</td>
        <td>72 hours every three years</td>
      </tr>
      <tr class="table-data-container">
        <td>Expertise</td>
        <td>Taxes, audits, litigation services, and more</td>
        <td>Taxes</td>
      </tr>
    </tbody>
  </table>
</div>
<h2>Which type of tax professional is right for my business?</h2>
<p>The tax professional you choose must possess the necessary skill set to prepare and file taxes on your behalf with the IRS. They will handle sensitive personal information, including your marital status, income, children, and your social security number, so they must be ethical and trustworthy.&nbsp;</p>
<h3>Why choose a CPA for my business?</h3>
<p>Choosing a CPA would be optimal if your small business would benefit from a suite of accounting services beyond tax preparation, such as long-term tax planning or audit protection.</p>
<h3>Why choose a tax preparer for my business?</h3>
<p>If your small business doesn't require services beyond tax preparation, you will benefit from choosing a tax preparer for their service.&nbsp;</p>
<h2>Tax preparer vs. CPA FAQs&nbsp;</h2>
<h3>Is a CPA better than a tax preparer?</h3>
<p>A CPA and a licensed tax preparer should deliver similar results when preparing taxes. What's "better" comes down to your unique tax situation and business needs. If all you need is tax prep, either will do. But if you need more, CPAs offer a lot of value beyond tax preparation to your small business.</p>
<h3>Is a CPA more expensive than a tax preparer?</h3>
<p>Pricing will vary, with some firms priced more competitively for tax preparation than others. Additional CPA services will cost more.&nbsp;</p>
<h3>Work with Tax Professionals for Your Small Business Needs</h3>
<p>Preparing and filing taxes is complex, whether you use a CPA, licensed tax preparer, or <a class="link" href="https://1800accountant.com/blog/accountant-help-small-business-growth">accountant for your small business</a>. Sometimes knowing who to use can be difficult, which is where 1800Accountant can help with <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a>, <a class="link" href="https://1800accountant.com/services/business-tax-advisory">tax advisory</a>, and other services. We’ll match you with a tax expert who knows the ins and outs of your industry and state tax rules, maximizing your annual tax savings.&nbsp;</p>

<p>As a small business owner, you always want to do what’s best for your business. This includes making the perfect hires, selecting the right vendors, and choosing the best person to do your taxes. But which is best for your business, a CPA or a tax preparer? Use this blog as your guide to understanding […]</p>

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cpa-vs-tax-preparers

CPA vs. Tax Preparer: Which Is Best for Your Business?

<p>Tax season is right around the corner. Now is the time to prepare your small business taxes. This includes everything from invoices, receipt books, bank statements, and any records pertaining to your small business expenses.</p>



<p>Maybe you’re well-prepared and already a pro at keeping a detailed daily expense tracker. Or maybe you’ve let some things slide over the past year, and tracking business expenses has taken a back seat to other priorities. If you need a refresher course on how to keep track of small business expenses, read on for all the details. </p>



<h2>What Qualifies as a Business Expense?</h2>



<p>If you’re a new small business owner, you might be surprised at all the day-to-day expenses you accumulate to keep your company up and running. Certain items are expected, like <a class="link" href="https://1800accountant.com/blog/small-business-payroll">payroll</a> or utilities, but others might be one-time expenses or vary in cost over time. </p>



<p>Any cash that flows in and out of your business should ideally be tracked with some <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-crash-course-record-keeping-small-businesses">simple record-keeping</a> habits.&nbsp;</p>



<p>It’s also important to remember that the process for small business expense tracking should differentiate two types of costs. The IRS gives guidance on which <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep" target="_blank" rel="noreferrer noopener">records to keep</a>, noting that purchases and expenses are separate.&nbsp;</p>



<ul>
<li>Purchase: A purchase is an item that you pay for and then resell to a customer. Raw materials or components that are used to manufacture a finished good are considered purchases.</li>



<li>Expense: An expense falls under a much broader category than purchases. This is any type of “ordinary and necessary” cost needed to maintain your business operations.&nbsp;</li>
</ul>



<p>Here’s the key takeaway: A small business expense can be <a class="link" href="https://1800accountant.com/blog/small-business-tax-deductions-checklist">deducted from your taxes</a>. If you still need help understanding what qualifies as an expense, here are a few examples:</p>



<ul>
<li>Travel: Lodging and meals may be deducted for some individuals, like self-employed truck drivers.</li>



<li>Taxes: Certain taxes, like property taxes, are considered an expense for rental property owners.</li>



<li>Office supplies: This is often overlooked by small business owners, so don’t forget to keep track of all the office supplies you purchase solely for the use of your business.</li>



<li>Insurance: If you’re a freelancer who pays for an independent healthcare plan, you can consider this a business expense.</li>
</ul>



<h2>Why You Should Be Tracking Business Expenses</h2>



<p>Maintaining good business records of any type is important, especially for financials like expenses and payroll.&nbsp;</p>



<p>When the IRS is involved, you don’t want to be anxiously searching for receipts and pay stubs because you failed to track your business expenses properly.&nbsp;</p>



<p>Here are a few reasons why expense tracking for small businesses is a must:&nbsp;</p>



<ul>
<li><strong>Identify your credits and deductions</strong>: If you’re not a tax professional, it’s easy to <a class="link" href="https://1800accountant.com/blog/missed-deductions-freelancers">miss common deductions</a> that will otherwise save you money. Using a daily expense tracker will save you valuable time when you need to identify any credits or deductions.</li>



<li><strong>Highlight budget issues:</strong> In personal finance, it’s often recommended to use a cash-only budget if you have trouble limiting your spending. Once you see how much cash you’re spending, you’re more likely to think twice about an unnecessary purchase. While you may not want to use cash only for your business expenses, using a tracking system will help you see exactly where your money is going and whether you can cut back in any areas.</li>



<li><strong>Audit preparation</strong>: If you put in the effort now to track your small business expenses and maintain other financial records, you’ll be better prepared to resolve an <a class="link" href="https://1800accountant.com/blog/you-received-an-audit-notice-now-what">IRS audit</a>.&nbsp;</li>
</ul>



<h2>4 Simple Steps to Track Your Small Business Expenses</h2>



<p>Tracking business expenses and understanding some common forms like a 1099 expense tracker are both <a class="link" href="https://1800accountant.com/blog/small-business-bookkeeping-basics">small bookkeeping basics that you can’t ignore</a>. It’s also important to learn some <a class="link" href="https://1800accountant.com/blog/common-bookkeeping-terms">common bookkeeping terms</a> so you can better communicate your needs with a <a class="link" href="https://1800accountant.com/services/bookkeeping">small business professional</a>.&nbsp;</p>



<p>Here are 4 simple steps you can take today to ensure that your small business expense tracking strategy is efficient:</p>



<h3>1. Understand some basic tax forms </h3>



<p>When you own a business, there are a lot of documents you’ll need to complete related to taxes. For example, a <a class="link" href="https://1800accountant.com/blog/what-is-a-1099">1099 tax form</a> is one you’ll need to know if your expenses include independent contractors or freelancers. There are a variety of 1099 forms, but you can consider a <a class="link" href="https://www.irs.gov/pub/irs-pdf/f1099msc.pdf" target="_blank" rel="noreferrer noopener">1099-MISC</a> expense tracker as a form that documents money spent by your business.</p>



<h3>2. Create a method for organizing different records</h3>



<p>Bookkeeping software and <a class="link" href="https://1800accountant.com/blog/create-simple-bookkeeping-spreadsheet-business">spreadsheets</a> are both common methods for tracking expenses. Whichever method you use, take extra care to organize your expenses in different categories. It might be tempting to include taxes, payroll, and insurance all in the same expense category, but this will inevitably cost you more work when tax season approaches.</p>



<h3>3. Audit your existing expenses</h3>



<p>Once you have a solid method in place to organize your documents, it’s best to complete an audit of all your current expenses so you know exactly where everything belongs. Several expenses are probably recurring, so performing an audit will help in creating a more detailed budget.&nbsp;</p>



<h3>4. <strong>Partner with a professional</strong></h3>



<p>Small business owners already have a lot of responsibilities outside of tracking expenses and dealing with taxes. Trying to do everything yourself likely isn’t feasible as a long-term solution. The best strategy to stay organized is to use a trusted, automated expense management solution like 1-800 Accountant. Creating a partnership with experienced bookkeeping professionals will keep your business expenses tracked properly and efficiently.&nbsp;</p>



<h3>Leave Your Tax Prep to a Trusted Professional</h3>



<p>It can be challenging to keep track of small business expenses, not to mention all the nuances of tax <a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions">deductions and credits</a>. </p>



<p>Rather than trying to sort out the details yourself, consider working with a professional who can ensure that your financial reporting remains accurate. 1-800Accountant has a team of experienced bookkeepers who understand the best practices for your small business expenses. We offer a robust suite of services, including <a class="link" href="https://1800accountant.com/services/payroll">payroll</a> management, year-round <a class="link" href="https://1800accountant.com/services/business-tax-advisory">small business tax advisory</a>, <a class="link" href="https://1800accountant.com/services/audit-defense">audit defense</a>, and more. <a class="link" href="https://1800accountant.com/support/contact-us">Contact us</a> today and speak to a pro who can manage your expenses.</p>

<p>Tax season is right around the corner. Now is the time to prepare your small business taxes. This includes everything from invoices, receipt books, bank statements, and any records pertaining to your small business expenses. Maybe you’re well-prepared and already a pro at keeping a detailed daily expense tracker. Or maybe you’ve let some things […]</p>

Text overlay saying "guide to small business expense tracking" on an image of a person using a laptop with financial documents on the table.

Guide-to-Expense-Tracking_blog-header

A Guide to Small Business Expense Tracking

<p>Certified accountants have the knowledge and experience needed to help you navigate the taxes and finances specific to your business. However, it’ll take the right accountant with the appropriate experience and background to give you the support that you need. To help you find the right accountant for your business, we’ve developed a list of questions to ask an accountant.</p><h2>4 Essential Questions to Ask an Accountant</h2><h3>1. What records should I maintain?</h3><p>You’ll need to <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-crash-course-record-keeping-small-businesses">maintain different records</a> for everything from financial statements to payroll records. Your accountant will likely encourage you to maintain records that pertain to <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep">expenses, gross receipts, and purchases</a>, so you can track your business’s debits, credits, and income.&nbsp;</p><p>This includes:</p><ul><li>Bank account statements</li><li>Canceled checks or other documents proving payment/electronic funds transferred</li><li>Cash register tapes</li><li>Credit card receipts and statements</li><li>Deposit information (cash and credit sales)</li><li>Forms 1099-MISC</li><li>Invoices</li><li>Receipt books</li></ul><p>Ask your accountant if they have a specific software or record maintenance system that they use for their clients.&nbsp;</p><h3>2. Are there new tax laws or changes to other business regulations I should be aware of?</h3><p>Your accountant will have a good sense of any recent changes to tax law and other business regulations that could impact your company. The <a class="link" href="https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes">IRS outlines some changes</a> that may impact tax filings in 2023. Some changes include:</p><ul><li>No additional stimulus payments</li><li>Some tax credits return to 2019 levels</li><li>No above-the-line charitable deductions</li><li>More people may be eligible for the Premium Tax Credit</li><li>The Inflation Reduction Act of 2022 changes the eligibility rules to claim a tax credit for clean vehicles</li></ul><p>These are just a few changes at the federal level, but you may be subject to additional rules and regulations at the state and local levels. An accountant will help ensure you are above board in all of these areas. You’ll want to do this on an annual basis as tax laws change from year to year.</p><h3>3. What is the best way to prepare for tax season?</h3><p>It’s always a good idea to prepare for tax season as early as possible. However, if gathering your records and submitting your return causes you anxiety, this is where a <a class="link" href="https://1800accountant.com/services/small-business-taxes">seasoned accountant</a> can ease your burden.&nbsp;</p><p>One of the key advantages of working with an accountant is that they work throughout the year to help prepare you to file your taxes — meaning you won’t have to scramble in April as the deadline approaches. A potential accountant should be able to tell you what strategies and processes they use to file taxes accurately and efficiently.&nbsp;</p><h3>4. What business expenses are deductible?</h3><p>As a financially responsible business owner, you’ll want to know what business expenses are deductible so you can maximize your tax savings. Let your accountant know what business expenses you make or plan to make in a given year, and they can help determine if a deduction is available. The IRS provides a thorough outline of <a class="link" href="https://1800accountant.com/blog/small-business-tax-deductions-checklist">deductible business expenses</a>, so do a little research ahead of time if you want to ask about a particular deduction.&nbsp;&nbsp;</p><h2>What Questions to Ask an Accountant When Starting a Business</h2><h3>1. What business structure is best for my situation?</h3><p>The size and scope of your company may dictate the way you structure your business, but if you have some flexibility, you can work with your accountant to <a class="link" href="https://1800accountant.com/blog/6-tricks-to-choosing-the-best-entity-for-your-small-business">determine the structure that will work best for your situation</a>. There are five main types of business structures:</p><ul><li><a class="link" href="https://1800accountant.com/blog/what-is-a-c-corporation" target="_self">C corporation (C corp)</a></li><li><a class="link" href="https://1800accountant.com/blog/business-entity-llc">Limited liability company (LLC)</a></li><li><a class="link" href="https://1800accountant.com/blog/business-entity-partnership">Partnership</a></li><li><a class="link" href="https://1800accountant.com/blog/business-entity-s-corp">S corporation (S corp)</a></li><li><a class="link" href="https://1800accountant.com/blog/business-entity-sole-proprietorship">Sole proprietorship</a></li></ul><p>Your accountant will have a better sense of the tax and legal nuances of the various structures, so be sure to go into your meeting prepared with details about your business operations.&nbsp;</p><h3>2. What are my tax obligations?</h3><p>A vital piece of information every business owner needs to be aware of is how much they’ll owe in taxes, including <a class="link" href="https://1800accountant.com/blog/quarterly-estimated-taxes">quarterly estimated tax payments</a>. Be sure to ask your account how much you should set aside to cover your tax obligation and when you will need to pay your tax bill.&nbsp;</p><p>Also, ask your accountant about how income taxes will impact your tax obligation. It’s best to plan ahead rather than wait until the last minute in April to get started on your tax filing. Remember to max out your applicable accounts ahead of tax day to reduce your taxable income. If you end up owing the IRS money, you might work with your accountant to determine the best way for you to pay your bill. If you do get a refund, consider the best way to spend or invest it and consult with your accountant if need be.</p><h3>3. How can I grow my business?</h3><p>While your accountant will not be an expert in marketing or engineering, they will be able to provide insight into how you can grow your business from a financial perspective. Profitability will be one key to your growth, and your accountant can help you to determine your break-even point.</p><h3>Work with Expert Small Business Accountants</h3><p>If you don’t have the time or know-how to do your own accounting, consider consulting with 1-800Accountant today. We provide tailored services with unlimited support, a dedicated accountant, and transparent pricing. Not only can we help with tax preparation but also <a class="link" href="https://1800accountant.com/services/entity-formation">entity formation</a> and <a class="link" href="https://1800accountant.com/services/small-business-taxes">accounting services</a>.&nbsp;</p><p>Schedule your free 30-minute consultation to learn how our <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business tax professionals</a> can help you and your company today.&nbsp;</p>

<p>Certified accountants have the knowledge and experience needed to help you navigate the taxes and finances specific to your business. However, it’ll take the right accountant with the appropriate experience and background to give you the support that you need. To help you find the right accountant for your business, we’ve developed a list of […]</p>

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Bookkeeping for Independent Contractors: 6 Tips to Keep in Mind

<p>While most people don't think of tax season as an exciting time to look forward to, it doesn't have to be something you dread. You'll be okay if you know what you're getting into and prepare. And there's no better time to prepare than right now, especially as we start approaching the end of the year.&nbsp;</p>



<p>If you wait until the following year to gather your records and tax data, you will make it much harder for yourself than it needs to be. You can do a lot in your year-end accounting to optimize your tax savings, <a class="link" href="https://www.sba.gov/business-guide/manage-your-business/pay-taxes" target="_blank" rel="noreferrer noopener">prepare to pay taxes in April</a>, and improve your planning and accounting overall.&nbsp;&nbsp;</p>



<p>Use your time while you’ve got it in 2022. Find out more and develop a small business year-end accounting checklist for your company to use this December.</p>



<h2>What is Year-End Accounting?</h2>



<p>For your 2022 tax return, you are only responsible for your income and expenses between January 1, 2022, and December 31, 2022. So as the end of the 2022 tax year gets closer, you are approaching your final chance to change how you calculate your taxable income.</p>



<p>End-of-year accounting is about the specific management and bookkeeping involved in preparing your company's accounts for the end of the fiscal year. Whether a business owner or a tax professional, the year's end is essential for attending to company finances.</p>



<h2>When Does the Accounting Year End?</h2>



<p>The accounting year may vary for each different business owner. Most businesses follow the calendar year, which means their accounting year begins on January 1 and ends on December 31. Other companies may have their 12-month fiscal year adapted for their schedule.</p>



<h2>Why Should Small Businesses Create a Year-End Accounting Checklist?</h2>



<p>The end of the year is an excellent time to be proactive in managing your tax bill. You can do a lot in year-end preparation to ease your tax burden and take control of your liability before you’ve closed the books for 2022.&nbsp;</p>



<p>Developing an accounting checklist and going through it with your staff or an accountant will set your business up for success in the tax season and the new tax year ahead. You can close out the tax year on your terms and prepare yourself to shift into the next one.&nbsp;</p>



<p>If you take a step back to planning at these natural transition times, you'll always react at the moment instead of deliberately moving toward the future. Keeping an end-of-year checklist for small business owners makes planning an intentional part of your year.</p>



<h2>6 Items to Include in Your Small Business Year-End Checklist</h2>



<p>You’re taking the time to make sure your company is in good financial shape for the next year with your year-end accounting checklist, but where do you start? Here are some critical items you should attend to as you wrap up the year.</p>



<ul>
<li>Tax deductions</li>



<li>Review and close out records for the year</li>



<li>Ensure you’re paying your quarterly estimated taxes</li>



<li>Estimate your tax liability</li>



<li>Get organized for the new year</li>



<li>Consult a tax professional</li>
</ul>



<h3>1. Maximize Your Deductions&nbsp;</h3>



<p>Tax deductions are an essential piece of your year-end accounting checklist. Claiming all your tax-deductible expenses will make a significant difference on your small business tax return, and all of those expenses need to happen before the accounting year ends.&nbsp;</p>



<p>Schedule your business expenses before the end of December if you want to be able to deduct them from your taxable income. On the other hand, you could postpone significant expenses until January if you expect to have more revenue to offset in the coming year.&nbsp;</p>



<h3>2. Review Your Books for the Year</h3>



<p>Your year-end closing process is about closing the books on the previous year's finances to be prepared for tax season. To get there, your bookkeeping for the last year needs to be thorough and complete.&nbsp;</p>



<p>Group similar transactions and set apart any major purchases made throughout the year. Identify refunds, income, and owner contributions. You should have a complete accounting of all your assets and liabilities, including accounts receivable and accounts payable that haven’t been processed yet, like unpaid debts or outstanding invoices. Double-check and update your inventory count of unsold goods.</p>



<p>Be sure to revisit and sort through these financial statements, too. If you let months go by before you go over these files, you will need to remember more to do this accurately and efficiently.</p>



<p><a class="link" href="https://1800accountant.com/services/bookkeeping">Bookkeeping for your small business</a> may initially seem manageable, but it can quickly become overwhelming. If you're struggling, reach out for assistance before submitting your information for tax preparation.&nbsp;</p>



<h3>3. Pay Quarterly Taxes</h3>



<p>Your year-end checklist should also remind you to<a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes"> stay current on your quarterly estimated taxes</a>. These are pre-payments to your tax bill based on what you expect to owe in a final accounting.&nbsp;</p>



<p>Here are the quarterly estimated tax deadlines:&nbsp;</p>



<ul>
<li>Quarter 1 Deadline: April 15</li>



<li>Quarter 2 Deadline: June 15</li>



<li>Quarter 3 Deadline: September 15</li>



<li>Quarter 4 Deadline: January 15 of the following year</li>
</ul>



<p>It's better to pay more in estimated taxes than underpay. If you underestimate what you owe, you could leave yourself with a large tax balance at the end of the year and get hit with underpayment penalties. Ensure your business is tax compliant by working with a <a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">quarterly estimated tax expert</a>.  </p>



<h3>4. Estimate Your Liability Ahead of Time</h3>



<p>Another crucial step in year-end closing accounting is to estimate what you’ll end up owing on your final return. Knowing more or less how much you’ll owe in advance can help you prepare for filing and paying.&nbsp;</p>



<p>Spend time calculating your total gross receipts. Overstated receipts lead to paying unnecessary taxes, while understated income numbers can mean penalties with the IRS further down the road. You don’t want either to happen to you. You can work off of your tax records from previous years to get started.&nbsp;</p>



<p>Plan for a year-end accountant consultation to ensure you're on top of all your income streams and possible deductions. You'll need all of that information to get an accurate estimate of your final liability.</p>



<h3>5. Get Organized for the Next Year</h3>



<p>Ending a year is like completing a chapter in your life or the life of your business. You can close that chapter and begin a new one in a way that sets you up for success with organized recordkeeping.&nbsp;</p>



<p>Use your year-end accounting checklist to ensure you're ready for the new year. It's the perfect time to make significant changes to your process, try out new accounting software, or <a class="link" href="https://1800accountant.com/blog/accounting-trends">update your system with other recent accounting trends</a>.&nbsp;</p>



<h3>6. Check in with an Expert Accountant</h3>



<p>Be sure to set up an appointment with a professional before the last minute in April. Take the time now to consult with your accountant on how to do year-end accounting for your business.&nbsp;</p>



<p>It is an excellent opportunity to get ahead of the game and ensure you're as informed and prepared as possible with your year-end accounting checklist. Consulting with your accountant for year-end planning is a smart way to ensure you cover your bases.&nbsp;However you decide to proceed, your company’s finances are in your hands. It takes time to <a class="link" href="https://1800accountant.com/services/small-business-taxes">get your small business taxes done right</a>, and there’s no better time than the present to invest in future savings.</p>

While most people don&#8217;t think of tax season as an exciting time to look forward to, it doesn&#8217;t have to be something you dread. You&#8217;ll be okay if you know what you&#8217;re getting into and prepare. And there&#8217;s no better time to prepare than right now, especially as we start approaching the end of the [&hellip;]

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Year-End-Accounting-Tips-blog-header

Year-End Accounting Checklist for Small Business Owners

Navigating small business bookkeeping and recordkeeping can be a daunting task for many business owners. However, a well-structured financial system is vital to the growth and success of your business. In our latest blog article, we deep dive into bookkeeping and recordkeeping, explaining their roles in business operations and the benefits they can have on your small business.

You might be asking: <a class="link" href="https://1800accountant.com/blog/small-business-bookkeeping">What's bookkeeping?</a> How can I keep records for my small business? What type of records should I keep? Do I need to save all business expense receipts? How long should I keep business documents? We've got answers to these questions and more. Continue reading so you can turn that financial confusion into clarity!
<h2><span style="font-weight: 400;">What Is Bookkeeping?</span></h2>
<span style="font-weight: 400;">Bookkeeping is a method of </span><a class="link" href="https://smallbusiness.chron.com/master-bookkeeping-60937.html" target="_blank" rel="noopener"><span style="font-weight: 400;">tracking funds</span></a><span style="font-weight: 400;"> and business documents that flow in and out of your small business. There are two types of bookkeeping: single-entry bookkeeping (for transaction entries only) and double-entry bookkeeping (for transaction entries and company cash flow). As you track your funds, you’ll compile categories, including business expenses, payroll records, employee records, revenue, and taxes.</span>
<h2><span style="font-weight: 400;">How Do I Keep Books for a Small Business? </span></h2>
<span style="font-weight: 400;">There is a </span><a class="link" href="https://bizfluent.com/how-4967598-compile-corporation-record-book.html" target="_blank" rel="noopener"><span style="font-weight: 400;">relatively simple method</span></a><span style="font-weight: 400;"> that you can implement in financial record keeping for your small business with just two binders. One will contain documents required within your state, such as licenses and permits. It would be best if you keep the following in the official binder: </span>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Articles of Incorporation or Articles of Organization </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Certificates </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Company seal</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Meeting Minutes </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Resolutions </span></li>
</ul>
<span style="font-weight: 400;">The second binder will contain daily records and most (if not all) financial transactions. Keep the following in your daily records binder:</span>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Accounting records </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Applications and permits</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Contracts entered by the company</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Insurance policies held by the company</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Membership certificates</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Names and addresses of all members or shareholders</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">An operating agreement or by-laws and any amendments</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Share transactions</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Shareholder interests</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">State filings (such as annual reports)</span></li>
</ul>
<span style="font-weight: 400;">As your business decides what it will implement over time, attempt to record everything in print. Divide the above sections into specific areas in your binders to remain organized. It is important to note everything, whether it's formal and official (meetings and minutes) or unofficial (daily activities). You should also date the records for even more accuracy. </span>
<h2><span style="font-weight: 400;">What Kind of Records Should a Small Business Keep?</span></h2>
<span style="font-weight: 400;">Whether you are using an accounting software program or other forms of financial record keeping, it is essential to know what kind of records you should keep. Keep receipts that pertain to <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep" target="_blank" rel="noopener">expenses, gross receipts, and purchases</a> to track your small business’s <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-debits-credits">debits and credits</a>, along with its income. </span>
<h3><span style="font-weight: 400;">Gross Receipts Documents: </span></h3>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Cash register tapes </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Deposit information (cash and credit sales) </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Forms <a class="link" href="https://1800accountant.com/blog/what-is-a-1099">1099-MISC</a></span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Invoices </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Receipt books</span></li>
</ul>
<h3><span style="font-weight: 400;">Financial Statements: </span></h3>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Canceled checks or other documents proving payment/electronic funds transferred </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Cash register tape receipts </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Credit card receipts and statements </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Invoices</span></li>
</ul>
<h3><span style="font-weight: 400;">Expense Documents:</span></h3>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Bank account statements</span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Canceled checks or other documents proving payment/electronic funds transferred </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Cash register tape receipts </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Credit card receipts and statements </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Invoices</span></li>
</ul>
<h2><span style="font-weight: 400;">Do I Need Receipts for Business Expenses</span></h2>
<span style="font-weight: 400;">While you do not need receipts for filing taxes or proving business expenses, small business owners can still benefit by keeping receipts. This will facilitate <a class="link" href="https://1800accountant.com/blog/how-to-reduce-tax-liability">decreasing your tax liability</a>, or the amount you'll owe in taxes. Some receipts can cause tax deductions, allowing you to save when it is time to file taxes. </span>

<span style="font-weight: 400;">You'll need </span><a class="link" href="https://finance.zacks.com/must-receipt-deductions-3147.html" target="_blank" rel="noopener"><span style="font-weight: 400;">receipts</span></a><span style="font-weight: 400;"> related to:</span>
<ul>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Bills for a product or service  </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Meals and travel </span></li>
 	<li style="font-weight: 400;"><span style="font-weight: 400;">Other items such as bonds, depreciated equipment, real estate, and stocks</span></li>
</ul>
<span style="font-weight: 400;">The IRS doesn't require receipts for business expenses that cost under $75 except for lodging. If you use a Schedule C Form for your business to deduct health insurance premiums, you don't need a receipt. Provided that you save the receipts and </span><a class="link" href="https://bizfluent.com/info-12131745-lost-business-receipt.html" target="_blank" rel="noopener"><span style="font-weight: 400;">you don't lose them</span></a><span style="font-weight: 400;">, you'll have a better chance to receive deductions and even reimbursements for your business expenses. </span>
<h2><span style="font-weight: 400;">How Long Do You Have to Keep Business Documents?</span></h2>
<span style="font-weight: 400;">You should keep documents and </span><span style="font-weight: 400;">business</span><span style="font-weight: 400;"> receipts</span><span style="font-weight: 400;"> for </span><a class="link" href="https://finance.zacks.com/irs-requirements-receipts-9289.html" target="_blank" rel="noopener"><span style="font-weight: 400;">at least three years.</span></a>

<span style="font-weight: 400;">This time frame includes the potential for IRS audits, which is why you should save all of the documents and receipts that you need. Also, that time frame increases to six years if the IRS suspects that you underreported your income. </span>
<h2><span style="font-weight: 400;">Work with Professional Accounting Services</span></h2>
<span style="font-weight: 400;">Bookkeeping can help your company track various categories of expenses, income</span><span style="font-weight: 400;">, and </span><span style="font-weight: 400;">tax payments</span><span style="font-weight: 400;">. With your bookkeeping needs, it may be wise to consider reaching out </span><span style="font-weight: 400;">for</span> <a class="link" href="https://1800accountant.com/services/small-business-taxes"><span style="font-weight: 400;">small business</span><span style="font-weight: 400;"> account</span><span style="font-weight: 400;">ing services</span></a><span style="font-weight: 400;">. Don’t hesitate to seek advice from experts to guide your small business on a path to business success.</span>

Navigating small business bookkeeping and recordkeeping can be a daunting task for many business owners. However, a well-structured financial system is vital to the growth and success of your business. In our latest blog article, we deep dive into bookkeeping and recordkeeping, explaining their roles in business operations and the benefits they can have on [&hellip;]

A woman with curly hair works at a home office desk, writing notes beside a laptop in a well-lit room with white walls and a blue clock.

bookkeeping-101-a-crash-course-in-record-keeping-for-small-businesses-2

Small Business Record-Keeping: 3 Best Practices &#038; Tips

Simple Record Keeping for Small Businesses

<p>Transforming a dream into a thriving business requires ingenuity, planning, and tireless dedication. But to truly elevate your venture and foster growth, there's another essential skill to acquire – understanding the profit and loss (P&amp;L) statement. </p>



<p>Navigating the financial landscape is critical to keep your company thriving, and while you don't need to be an accounting expert, understanding the basics is vital to your business's success.</p>



<p>Even if you have trusted professionals in your corner, being well-equipped to decipher the information provided ensures you remain in control. By learning to read P&amp;L statements (also known as income statements), you'll have the foundation to confidently make informed decisions for your business.</p>



<p>Don't wait any longer! Read this quick and easy-to-follow guide to unlock the keys to understanding the profit and loss statement today.</p>



<h2>What is a P&amp;L statement?&nbsp;</h2>



<p>A P&amp;L statement is a key financial document that reports on the status of a company’s financial health. It’s regularly produced by accountants for owners, entrepreneurs, and investors to assess the health of a business.</p>



<h3>What Does P&amp;L Stand For?&nbsp;</h3>



<p>P&amp;L stands for profit and loss, which are the principal factors assessed in a P&amp;L statement. Knowing how to read a profit and loss statement simply requires looking for the net income of a business over time.&nbsp;&nbsp;</p>



<h3>What sets it apart from other financial statements?&nbsp;&nbsp;</h3>



<p>A profit and loss statement reports on a company’s overall revenue and expenses over a certain period of time, usually monthly, quarterly, or by fiscal year. It is an income statement reporting directly on a company’s net profits. A single look at a profit and loss statement should tell you if the company is profitable or not.</p>



<h4>Cash Flow Statements&nbsp;</h4>



<p>There are two other key financial statements businesses regularly use to report and assess their finances: the cash flow statement and the balance sheet. The cash flow statement, unlike the P&amp;L, is not interested in net income but in the regular flow of cash in and out of the business.&nbsp;</p>



<p>A business needs a reserve of cash on hand to make purchases and pay bills. Even with high net profits, a company with poor or inconsistent cash flow will run into trouble when bills are due, and they find themselves without any cash on hand to pay with.&nbsp;</p>



<h4>Profit and Loss vs. Balance Sheet</h4>



<p>While cash flow statements and P&amp;L statements both report on finances over time, a balance sheet is intended to report on a given moment in time. It’s a snapshot of the current chart of accounts.&nbsp;</p>



<p>The balance sheet includes a comprehensive report of the current state of a company’s finances, balancing assets and liabilities. <a class="link" href="https://www.apaservices.org/practice/business/finances/balance-sheet" target="_blank" rel="noreferrer noopener">Reading the balance sheet and the snapshot it provides</a> is most helpful when comparing it to previous balance sheets.&nbsp;</p>



<h2>What goes into a profit and loss statement?</h2>



<p>A lot of different ingredients go into a profit and loss statement. The document should give you a full picture of your income over a set period of time. Ensure you’re familiar with the <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-30-common-bookkeeping-terms">common bookkeeping terms and financial language</a> you’ll find in a P&amp;L report.&nbsp;&nbsp;</p>



<h3>Revenue</h3>



<p>The top line of the P&amp;L statement should be your total revenue. This is the money you’ve received from all of your sales. How much money have you made?&nbsp;</p>



<h3>Cost of Goods Sold (COGS)</h3>



<p>The next step is the cost of goods sold, or COGS. COGS includes the raw materials and production costs of your products.</p>



<h3>Gross Profit</h3>



<p>To find your total gross margin of profits, subtract COGS from your revenue. This is the gross profit you’ve earned through sales.&nbsp;</p>



<h3>Operating Expenses</h3>



<p>After revenue, the P&amp;L statement reports on your operating expenses organized into various categories. This is where you include all your normal business expenditures outside the costs of the goods themselves.&nbsp;</p>



<p>This includes both direct and indirect costs of operation. Direct costs are the immediate operation costs, like employee wages and the materials associated with COGS. Indirect costs include everything else, from rental costs to utilities and insurance premiums.&nbsp;</p>



<h3>Net Operating Income&nbsp;</h3>



<p>Your net operating income represents your total income after you’ve taken out your operating expenses. These are your earnings before interest, taxes, depreciation, and amortization.&nbsp;</p>



<h3>Other Expenses</h3>



<p>Profit and loss statements should include other expenses like interest expense, income taxes, depreciation, and amortization, but they should be counted separately. These aren’t operating expenses, but they still have to get paid.&nbsp;</p>



<h3>Net Loss or Profit&nbsp;</h3>



<p>The bottom line of the P&amp;L statement is the final, most important total. This is your net loss or profit as a business. That means it’s the total revenue minus all of your expenditures.&nbsp;</p>



<h2>How to Read a P&amp;L Statement</h2>



<p>At first glance, a detailed P&amp;L statement may look intimidating. How do you figure out how to read a profit and loss statement when it’s just a long list of revenue and expenses?&nbsp;</p>



<p>The critical thing is to note the separate categories. Find the number totals at the end of each section before you get into the weeds and read the lists themselves.&nbsp;</p>



<p>You should be able to find the most essential takeaways at the beginning and the end of the statement as well. The top line will be your total revenue or sales, and the very bottom line of the P&amp;L statement will be your net income after all of your expenses have been subtracted from profits.&nbsp;</p>



<p>These are the essential sections you should find when reading a P&amp;L statement:&nbsp;</p>



<ul>
<li>Gross profits, which will be the total of your revenue minus the cost of goods sold (cogs)&nbsp;</li>



<li>Operating expenses split into separate categories</li>



<li>Non-operating costs like taxes and interest expenses</li>



<li>Net profits after subtracting total expenses.&nbsp;</li>
</ul>



<h2>Importance of Reading a P&amp;L Statement Accurately</h2>



<p>What is a profit and loss statement for if you don’t know how to read it? Your business plan is only as good as the data it’s based on, and the profit and loss statement is a key source of data for <a class="link" href="https://www.sba.gov/business-guide/manage-your-business/manage-your-finances" target="_blank" rel="noreferrer noopener">understanding your business</a>.&nbsp;</p>



<p>The bottom line of the P&amp;L statement tells you if your company is profitable or not. Once you have a sense of the larger picture, you can go into the details to see where you can trim expenditures or increase profits.&nbsp;</p>



<h3>How 1-800Accountant Can Help With Your Bookkeeping&nbsp;&nbsp;</h3>



<p>It’s important to know how to read a profit and loss statement, but you don’t have to know everything about accounting and bookkeeping. In fact, it’s better to have an expert who can help you review your financial situation.&nbsp;</p>



<p>Don’t hesitate to seek out professional <a class="link" href="https://1800accountant.com/services/bookkeeping">help with your small business bookkeeping</a> if you’re not sure how to read P&amp;L reports or if you want a second opinion. Get an expert from 1-800Accountant to show you how to analyze a profit and loss statement and make more efficient choices for your company.&nbsp;</p>

Transforming a dream into a thriving business requires ingenuity, planning, and tireless dedication. But to truly elevate your venture and foster growth, there&#8217;s another essential skill to acquire – understanding the profit and loss (P&amp;L) statement.  Navigating the financial landscape is critical to keep your company thriving, and while you don&#8217;t need to be an [&hellip;]

How-to-Read-Profit-&#038;-Loss_blog-header

How to Read a Profit and Loss (P&#038;L) Statement

How to Read a Profit and Loss (P&L) Statement

<p><a class="link" href="https://1800accountant.com/blog/complete-guide-start-business">Starting a business</a> can be equally exciting and stressful. Before you can get your business up and running, there’s much to consider regarding small business accounting and taxes. Ideally, a CPA (certified public accountant) tax accountant could handle everything from the initial <a class="link" href="https://1800accountant.com/services/ein-tax-id-filing">EIN filing</a> to business tax preparation on your behalf, so you can focus on growing your business. </p>



<p>When you work with a pro, you don’t need to have a background in finance. However, you should still know these five things about small business accounting.&nbsp;</p>



<h2 id="h-1-use-separate-bank-accounts-for-business-and-personal-use">1. Use Separate Bank Accounts for Business and Personal Use</h2>



<p>Entrepreneurs often joke that they’re married to their businesses. However, while joint bank accounts are standard for spouses, entrepreneurs should draw a clear line between their business and personal expenses.&nbsp;</p>



<p>It might be tempting to consolidate all your expenses into a single account, especially in the early stages of starting your business. However, you’ll quickly realize how difficult it can be to remember what you purchased at the end of the month. Also, consider the struggles you’ll face if you receive an <a class="link" href="https://1800accountant.com/blog/you-received-an-audit-notice-now-what">audit notice</a> and have to sort through endless piles of documents, receipts, and bills to decipher which expenses were business or personal.&nbsp;</p>



<p>Keeping your business expenses in a separate account will simplify this process and help you stay organized.</p>



<h2 id="h-2-save-for-taxes-from-the-beginning">2. Save for Taxes from the Beginning</h2>



<p>Small business expenses and revenue ebb and flow — it’s part of the excitement of a new business. However, it’s critical to set aside enough money for the taxes you’ll eventually need to pay. Don’t underestimate how much money you’ll need for future tax payments. Failure to pay your taxes will only lead to trouble with the IRS; it’s wise to <a class="link" href="https://1800accountant.com/services/business-tax-advisory">consult with a tax accountant</a> who can advise you on small business tax preparation and get you started on the right foot. By planning ahead and saving, you’ll avoid any unpleasant surprises when it comes time to pay the IRS.&nbsp;</p>



<h2 id="h-3-track-income-and-expenses">3. Track Income and Expenses</h2>



<p>One of the many perks of being a small business owner is defining your income amount and deciding <a class="link" href="https://1800accountant.com/blog/pay-yourself-small-business-owner">how to pay yourself</a>. Depending on your business classification, you’ll either pay through an owner’s draw or a regular salary.&nbsp;</p>



<p>Regardless of the method, you’ll need to track this income and all of your other business expenses like rent, cost of goods, and payroll for any additional employees. This is a critical practice not only for your small business tax preparation needs but also for your personal taxes.&nbsp;</p>



<p><a class="link" href="https://1800accountant.com/services/income-taxes">CPA income tax prep</a> is an easy solution to keep your financial records organized and readily available for tax season. Income taxes can become complex when you’re a small business owner, so give yourself peace of mind knowing that a financial expert will handle the details.</p>



<h2 id="h-4-track-assets-liabilities-and-equity">4. Track Assets, Liabilities, and Equity</h2>



<p>Income and expenses aren’t the only financial details you need to track for your business. Assets, liabilities, and equity are equally important to record because they give a bigger picture of your business's financial standing.&nbsp;</p>



<p>Assets refer to what a business owns, including accounts receivable and cash equivalents like money market funds.&nbsp;</p>



<p>Liabilities are the debt or other financial responsibilities that the business owes.&nbsp;</p>



<p>Finally, equity is the difference between assets and liabilities. The equity reflects the total value of a business if the assets were liquefied and the liabilities paid.&nbsp;</p>



<p>If you’re concerned about staying on top of your financial records, consider <a class="link" href="https://1800accountant.com/blog/outsource-accounting">outsourcing these duties</a> to an online accountant who can see trends and other details that might otherwise go unnoticed.&nbsp;</p>



<h2 id="h-5-pay-quarterly-estimated-taxes">5. Pay Quarterly Estimated Taxes</h2>



<p>Entrepreneurship has many rewards, such as creative freedom over business decisions and the ability to set your schedule.&nbsp;</p>



<p>The tradeoff for freedom is the additional work required to ensure accuracy for the business’s <a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">quarterly estimated tax payments</a>. An online CPA can handle your <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">self-employed tax filing</a> and allow you to focus on other important goals, like growth and expansion. Using a CPA will also ensure compliance and minimize your tax liabilities.</p>



<h2 id="h-turn-to-the-experts-for-year-round-tax-advisory">Turn to the Experts for Year-Round Tax Advisory</h2>



<p>There you have it! These are the five small business accounting basics every new entrepreneur should know. Whether you have a background in accounting or are entirely new to business taxes, you must stay on top of your business’s accounting and taxes.&nbsp;</p>



<p>Small business owners often stretch themselves thin trying to juggle their various responsibilities. One thing worth removing from your plate is accounting. The tax experts at 1-800Accountant provide tailored advice with unlimited support, a dedicated accountant, and transparent pricing. Learn more about our <a class="link" href="https://1800accountant.com/services/small-business-taxes">year-round tax advisory services</a> to see what we can do for your business.&nbsp;</p>

Starting a business can be equally exciting and stressful. Before you can get your business up and running, there’s much to consider regarding small business accounting and taxes. Ideally, a CPA (certified public accountant) tax accountant could handle everything from the initial EIN filing to business tax preparation on your behalf, so you can focus [&hellip;]

Two separate binders labeled assets and liabilities.

entrepreneurs-need-know-accounting

5 Things Entrepreneurs Need to Know About Small Business Accounting

Nothing may be more rewarding than laboring all day to clean up a messy house and then seeing how sparkling and new it looks after this hard work. While house cleaning service providers may get this nice dose of satisfaction, they are still like all self-employed professionals who get hit with countless taxes and IRS regulations.

<span style="font-weight: 400;">In this article, we'll discuss </span><a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed"><span style="font-weight: 400;">self-employed house cleaner tax deductions</span></a><span style="font-weight: 400;"> and offer tax tips for </span><span style="font-weight: 400;">independent contractors</span><span style="font-weight: 400;">. </span>So, to ease the tax burden, here are some key expenses you may be eligible to write off on your IRS income tax return if you’re a housekeeper working for yourself.
<h2>Self-Employment Tax Deduction</h2>
<span style="font-weight: 400;">Self-employment taxes are the taxes an independent contractor or self-employed individual pays to the federal government for Medicare and </span><span style="font-weight: 400;">Social Security</span><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">The </span><span style="font-weight: 400;">self-employment tax</span><span style="font-weight: 400;"> rate is 15.3%—12.4% for </span><span style="font-weight: 400;">Social Security tax</span><span style="font-weight: 400;"> and 2.9% for </span><span style="font-weight: 400;">Medicare tax (hospital insurance)</span><span style="font-weight: 400;">.</span>

<span style="font-weight: 400;">Learn more about </span><span style="font-weight: 400;">self-employment tax deductions</span><span style="font-weight: 400;"> and other commonly missed </span><a class="link" href="https://1800accountant.com/blog/missed-deductions-freelancers"><span style="font-weight: 400;">freelance tax deductions</span></a><span style="font-weight: 400;">.</span>
<h2>Top 5 Tax Deductions for Self-Employed Housekeepers</h2>
<h3>Housekeeping supplies</h3>
<span style="font-weight: 400;">You may not think the Windex you use for your </span><span style="font-weight: 400;">house cleaning business</span><span style="font-weight: 400;"> would qualify as an </span><span style="font-weight: 400;">expense</span><span style="font-weight: 400;"> write-off, but it is. </span>The expenses you incur to purchase or replace cleaning supplies you need to conduct your home cleaning service are tax deductible. Examples may include:
<ul>
 	<li>Vacuums, dust busters, etc.</li>
 	<li>Solvents</li>
 	<li>Soap</li>
 	<li>Towels or rags</li>
 	<li>Gloves</li>
 	<li>Windex and other cleaners</li>
 	<li>Mops</li>
 	<li>Brooms</li>
 	<li>Sponges</li>
 	<li>Buckets or containers</li>
 	<li>Trash bags</li>
 	<li>Bags to carry your cleaning supplies</li>
 	<li>Uniforms</li>
</ul>
<h3>Vehicle and travel expenses</h3>
If you drive a personal vehicle from one worksite to another, you can claim a portion of your vehicle expenses as a business tax deduction for your housekeeping work. There are two ways you can take advantage of this write-off – either claiming the mileage you drive or claiming actual vehicle expenses.

<a class="link" href="https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022" target="_blank" rel="noopener">Per the IRS</a>, the standard mileage deduction rate for the first 6 months of 2022 is 58.5 cents per mile. This then increases to 62.5 cents per mile for the final 6 months of 2022,  so you can deduct this amount for any business-related trips you’ve made – but only when going from one location where you are cleaning to another. You cannot deduct your trip from home to a worksite or vice versa.

Per the IRS, in 2023, the standard mileage deduction rate has increased to 65.5 cents per mile driven for business use.

The other option is to write off the actual expenses you incur on your vehicle. In other words, you can claim a percentage of all vehicle expenses you incur and deduct this portion you pay for your housekeeping labor. These may include:
<ul>
 	<li>Gas</li>
 	<li>Vehicle insurance</li>
 	<li>Maintenance</li>
 	<li>Lease payments</li>
 	<li>Depreciation</li>
</ul>
Any tolls or parking fees you may incur in some commercial or residential areas can be written off on your IRS return as well.

Of course, if you travel to different job sites in a day via public transit or Uber, these costs can also be deducted as business-related travel expenses. Just remember that you can’t include your commutes in this deduction.
<h3>Phone expenses</h3>
If you use your personal cell phone or a landline in your home to make housekeeping arrangements with your clients, you can write off a portion of your phone bill as business expenditure. Just be sure to accurately estimate what percentage of time you spend on the phone is for your cleaning work and what percentage is for personal use.
<h3>Marketing costs</h3>
Any marketing-related expenses you incur to help promote your housekeeping services are tax deductible in the eyes of the IRS. Such expenses may include brochures, flyers, a website, social media marketing, or even a mobile app for your clients to schedule their cleaning appointments with you.

If you hire a contractor to provide marketing materials for you, this cost is also deductible.
<h3>Insurance for your housekeeping business</h3>
Being a business owner can be risky from a liability standpoint, so be sure you are properly insured. The good news is that your business insurance premiums can be claimed as a write-off. You may choose to invest in liability insurance, property insurance, and other policies based on your specific situation.
<h2>Work with tax professionals to help you save</h2>
Looking for more ways to save money in your housekeeping business? Reach out to our tax professionals who have expertise in <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">saving money for house cleaners who are self-employed</a>.

Nothing may be more rewarding than laboring all day to clean up a messy house and then seeing how sparkling and new it looks after this hard work. While house cleaning service providers may get this nice dose of satisfaction, they are still like all self-employed professionals who get hit with countless taxes and IRS [&hellip;]

A young self employed house cleaner closing the blinds to keep the sunlight out.

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Self-Employed House Cleaner Tax Deductions

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