The tax season is tough for everyone. It is even tougher for freelancers because they have the extra responsibility of keeping track of all their expenses (meals, travel, entertainment, etc.), incomes, and receipts for taxes.
Recording these 1099 tax deductions or business expenses can be time-consuming and tedious.
However, saving and recording all your receipts are vital for a freelancer. This is because those expenses can be deducted when you file your annual taxes.
Receipts prove that your expenses are legitimate business costs and not fraudulent ones. They can come in handy in the unfortunate case that the IRS decides to do a spontaneous tax audit of your receipts/returns.
Luckily for you, you no longer need to spend hours hoarding receipts and manually inputting business expenses into a spreadsheet. Receipt tracking apps are here to relieve you of that burden.
Let's take a closer look at what makes receipt tracking apps work for a freelancer.
Note: On average, users save $5,600 from their tax bill by using our software. If you want to track self-employed deductions and stay on top of all your taxes, try a 7-day test drive of Bonsai Tax. Our app records your receipts and sends you notifications to file quarterly taxes as well as notify you of any filing deadlines. You'll also get access to all our product suite for freelancers.
While many tax receipt-scanners out there offer features that resonate with different business owners' values, it is a widely accepted fact that the software that can automate the receipt-tracking process is the preferred choice.
The best receipt app should be able to name, arrange and organize the receipts efficiently and quickly. Other features include:
Nothing too complicated. The ability to dig deep into the receipt data is one of the biggest benefits of going digital for receipt expense tracking.
A receipt scanning app is ideal for just such a situation as you can link all your expense data, invoices, and receipts to different categories, accounts, and projects.
With everyone having some kind of mobile device-- a mobile phone, tablet, or laptop-- an app that can work on any device through mobile apps from either IOS or android app stores are ideal.
Most of these mobile apps just need you to take pictures of receipts to scan them. Others even come with in-built scanners that make it easy to scan receipts, create and submit expense reports.
OCR uses an algorithm that converts characters from printed sources into digital formats that allows them to be easily manipulated and edited.
For quick and easy creation and submission of expense reports, look for an app with Optical Character Recognition technology that automatically inputs data into an expense report by pulling it from a scanned receipt.
Digitally saving your receipts saves you space and time trying to decipher damaged and faded receipts. After all, you'll need to keep tax receipts for a long time in case you get audited. Physically saving your receipts in a cabinet or storage box exposes them and they may get damaged from wear and tear and natural disasters such as floods or fires.
Now, let’s have a look at five of the best receipt-tracking apps out there.
We've put together a list of the finest receipt scanners, receipt scanning apps, and software to organize your receipts.
Let's start off with our favorite receipt scanner...
With raving reviews from the online community, Bonsai Tax is quickly becoming the best 1099 expense tracker amongst freelancers. People especially love the interactive and intuitive user interface that makes it easy for everyone to navigate the system.
Bonsai's receipt scanner automatically imports expenses from bank and credit cards, then categorizes as well as tracks them on the web and on mobile apps. Not to mention, the tax deduction tracker could provide you with quarterly tax estimates for your payments throughout the year.
Bonsai offers full and unlimited access to all its Workflow and plus features in its free trial version which lasts for 14 days. However, you will be required to enter your credit card information so you can begin your free trial. Don't worry, nothing will be charged to your credit card until your subscription ends.
This app has been hailed the go-to tax software for self-employed folks and here’s why:
Gone are the days that you had to track your income and expenses manually. With Bonsai’s centralized dashboard, everything is all laid out and you can simply see what you’ve spent and made each quarter or month.
You can create expense reports at the push of a button when tax season rolls around. Let's get into the other tools that come along with using Bonsai's automatic tax receipt organizer.
Bonsai comes with pre-installed contract templates that cover all major legal items that you require to create your contracts. All you have to do is fill in the specific details of your project without worrying about all the legal loopholes.
Bonsai also allows you to customize your proposals with your logos and images. It then gives you the chance to create different proposal packages that your clients can choose from. It also notifies you when a client views your proposal.
The time recording feature is awesome for freelancers who take on multiple projects at the same time. With this feature, you can track time for different projects and not miss out on any of them and lose money.
The central dashboard allows you to have all your invoices, projects, payments, and tasks in one convenient place. The different systems integrate seamlessly, communicate smoothly, therefore streamlining all your freelance work.
Bonsai is really straightforward to use with its simple user interface. It allows you to automate your processes and have your financial and project information in one place. Put simply, it makes tracking business expenses for your small business hassle-free.
If all these sound good to you, then go ahead and try it. Do a test run of the software for 14 days here and see for yourself why freelancers are raving about Bonsai.
Xero is one of the most popular accounting tools out there alongside QuickBooks. Xero’s receipt capture feature through snapping a photo makes it a favorite of many freelancers. This feature allows you to submit your expense claim immediately after you snap a photo of your receipt without the hassle of having to manually record or scan it, making expense tracking a breeze.
Xero allows for automatic data entry which enables easy matching of all your transactions to your bank feed. Small business owners benefit from this expense reporting mobile app which makes expense reporting easier for you come tax time.
Xero’s bill and receipt capture tool, Hubdoc makes it easy for you to get your receipt and bills to Xero, making your bookkeeping process run smoothly.
Xero also allows for cloud storage as all the receipts that are processed through Hubdoc are automatically stored on the cloud. This means that you can access your receipts and invoices any time you want, and with permission, your accountant can access them too.
QuickBooks is an amazing accounting software that is ideal for medium-sized or small businesses. QuickBooks Receipt Scanner utilizes Optical character Recognition technology to scan receipts and record all attributes of your transaction including the time, date, and location of the transaction.
Freelancers can use QuickBooks self-Employed which has an intuitive and interactive user interface that lets you sort between your small business and personal expenses. This allows you to stay on top of your finances.
QuickBook also has the added advantage of being able to integrate with many receipt-scanning apps which give you a comprehensive look at your finances.
FreshBooks is a free mobile app that is available in both IOS and Android systems. It is dynamic accounting software that was built with small businesses in mind so it is super easy to use.
As with most digital receipt scanning apps, FreshBooks allows you to simply snap a photo of your receipt to scan it.
Once you add the data captured from your receipt such as the purpose of the expense, the grand total, taxes, and the name of the vendor into the expense category, it is automatically synced with all your other devices that have the app such as your desktop. This makes it easy for you to view and retrieve the data whenever you need it, wherever you need it. Check out our list of the best Freshbooks alternatives.
Just like Wave, the beauty of this expense reporting app is that it seamlessly integrates with FreshBooks. Not only does it allow you to export your expenses from your business credit cards within the app, but it also has SmartScan capability, its receipt scanning software, that captures the most important details from your receipt once you take a picture of it.
On top of receipts, that app can help you track mileage too. It uses GPS tracking to help record business travel data.
The price is not too bad either. It only costs $5 per month per user. This scanner app emails your digital receipts and expenses to your Expensify account which allows you to create expense reports on the go without having to input the receipt details manually.
Check out some of the other alternatives to Expensify.
For you to avoid being flagged for a potential audit by the IRS, you need to sort out your receipts for taxes and identify which expenses qualify as business expenses. With the numerous receipts from meals, entertainment, and travel expenses, you need to make notes on the receipts or on a memo, stating who you were with and why. This will make it easy for you to categorize your expenses when you upload them to your account software app when you are filing during tax time.
Keeping your receipts benefits small businesses and freelancers in the long run. You can maximize those benefits by tracking your receipts. When you track your receipts, you can identify and know if you are liable to pay taxes. You can also make the most out of the expenses you claim.
Use Bonsai Tax's receipt-tracking software for receipt management will make your business life easier. Try a 14 day free trial here. The software's ability to integrate with any accounting software is a bonus as it helps simplify the itemization of all your transactions, making it easier for you to handle your finances by streamlining your budgeting process.
Are you having trouble navigating 1099 forms? Check out this breakdown of all 21 1099 types, and you’ll understand their intended purpose and use in no time.
How do you send W-2 forms as an employer? How do you protect sensitive information when delivering W-2s? Find out right here.
It’s tough to figure out how much money to set aside as a 1099 contractor, especially with quarterly payments in play. Use this article to figure out how much you have to pay.
