Tax Services for Independent Contractors in Phoenix AZ H&H CPA

cash flow

If you are an independent contractor in Sacramento or Roseville, turn to the experienced CPAs and tax preparers of Cook CPA Group for efficient accounting and bookkeeping services tailored to your business needs. You can treat anyone working for you as an employee and it will not concern the IRS or your state government as long as you follow the employment rules and laws, and pay all employment taxes due. If you want to treat workers as independent contractors, review the rules and get professional advice to ensure the classification of independent contractor is supportable under both the IRS and your state laws. Accounting software for independent contractors is accounting software that is geared toward independent contractors rather than big companies.

responsible for paying

And the only way to accurately accomplish this self-employment taxes is by having independent contractor accounting. In general, an individual or business is considered an independent contractor if they provide products or services under either a written contract or verbal agreement. You can also call them freelancers as they are not paid on a regular basis unlike full time employees. And while most of the independent contractors choose sole-proprietorship, others opt to establish their own LLC or S-Corp. The trade-off is that your employers do not put money towards your health insurance, workers’ compensation, bonuses, unemployment taxes, payroll taxes, or contribute to your 401.


The Borello test does not guarantee the accountant for independent contractor can be an independent contractor. Some workers may prefer to be classified as independent contractors because employees are not permitted to deduct unreimbursed employment expenses on their personal tax returns. Whereas independent contractors can claim business deductions.

business and personal

Doing this process will help reviewing your financial statements easier and make filing your tax return, federal tax, payroll taxes a breeze. We chose QuickBooks because we believe it has the most features, ease-of-use, and pricing that most independent contractors will need. But every contractor is different, so one of the other accounting apps on our list may fit your needs better. Paid add-on services include online ACH and credit card processing and payroll. But these cost more than some competitors, so if you process a lot of payments, you may end up paying more with Wave’s “free” accounting than you would with a paid app.

How to become an independent contractor

Xero gives QuickBooks a run for its money when it comes to accounting features for independent contractors. Features include financial reports, mobile apps, more than 1,000 integrations, live bank account connections, invoicing, and access for multiple team members. Xero customers also get free access to Hubdoc, which allows users to extract data from documents.

How do you record contractor payments in accounting?

W-2 and 1099

This form will show how much you paid the contractor and will specify what type of services you paid for, such as non-employee compensation, rent or royalties. If you did withhold any taxes for an independent contractor, you must list the payments on the 1099 as well.

What the business controls, the financial investment of each party and the relationship the business has with the worker will point to either an employer-employee relationship or a business-contractor relationship. As is always recommended when drawing up any kind of legal document, both parties can be well served to consult a qualified attorney with experience in independent contractor contracts. They can help with negotiations, but at a minimum they will see to it that the basic requirements of any accounting contract are included.

Benefits  Of Independent Contractor Accounting

Not only that, we’ve encountered many different scenarios among independent contractors too. Zoho made our pick as best accounting software for part-time contractors because its basic, free version provides everything most contractors will need–all at no cost. If your part-time business generates more than 1,000 invoices a year, you’ll need to upgrade. But even the Standard version, priced at just $15 per month billed annually, which offers up to 5,000 invoices a year should be enough for most part-timers.

You are on your Net Profit, the income left after you have deducted allowable business expenses. To learn more about an independent contractor agreement for an accountant and bookkeeper, you canpost your legal needon UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Thanks for your interest!Fill out this quick form to begin.

If a worker files Form SS-8, the IRS will send a letter to the business. The business is asked to complete and return the form to the IRS, which will render a classification decision.

  • An independent contractor does not have the ease of having an employer take their taxes out of each paycheck.
  • They will be able to pay their taxes to the IRS with more accuracy.
  • Unlike employee wages, which you’ll handle through your payroll, you pay your independent contractors like you would any other kind of supplier, via your accounts payable system.
  • It is important that businesses properly classify their workers.
  • By transitioning from contractors to employees, I reduced my risk as a business owner by not having to worry whether the government considered them employees, which involved a myriad of rules and regulations.
  • An independent contractor agreement for accountant and bookkeeper is an important document to determine, for tax purposes, that the worker is not an employee of the company.

It does not cover part-time help hired to do computer-related work nor does it cover students hired to do tax/legal research. InDinero is a full-service accounting software with accounting and tax preparation service in one. Like Bench, there is a human element to the service, but you’ll have to reach out to inDinero to get a specific quote for pricing and services. You’ll get monthly financial reports and can rest easy knowing the books are taken care of.