As an independent contractor, you're running your own business - and you experience all of the perks and challenges that come with that. Tax season isn't fun for anyone, but it's particularly frustrating as a 1099 independent contractor.
We all experience the same thing year over year. Tax season arrives, and it's all you can do to pull everything together to file, let alone do it in a way that will save you money. You work through the endless forms, attempting to find all of the information you need. You get to the part where you need to fill in your Schedule C deductions… and… nothing. Another year went by and you don't have the necessary documentation to deduct most of your business expenses. "Oh well" you think to yourself, "it's not worth the time anyway."
Here's the deal: real estate agents are losing serious cash by neglecting to take advantage of available deductions.
The truth is, it's incredibly time consuming to track your expenses, mileage, and deductions all year-round. And guess what? It isn't as difficult as it sounds if you start early in the year. Below are a few things you can do to help yourself survive tax season as an independent contractor.
1. Know what deductions you should be looking out for.
The first step is knowing what deductions are available to you - and there are more than you might think. Things like your home office or software subscriptions are deductible expenses that you shouldn't let slip through the cracks. Know what you should be looking out for, so you can get a system in place to track them year-round.
For a comprehensive list of deductions and information about each, click here to download our Guide to Stress-Free Taxes for Agents.
2. Track your expenses as they happen.
Receipts are every independent contractor's worst enemy. Paper or digital, they're a pain to keep track of and they're difficult to organize when it comes time to file those taxes.
Consider a simple personal accounting system like QuickBooks Self-Employed. This app lets you snap a pic of a receipt from directly within the app and it automatically categorizes and stores that receipt. It then matches the receipt with the expense when it comes through as a bank charge. When it comes time to file, all of those business expenses have been tracked, categorized for your Schedule C, and documented appropriately. You can officially say goodbye to that mismanaged shoebox of receipts.
Mileage tracking is one you definitely won't want to miss. You're always on the go. Some days it feels like you live in your car - you're running errands before an open house, picking up signage, meeting with clients, and having coffee with prospective clients.
When you have the QuickBooks Self-Employed app, it tracks your mileage every time you get in your car (seriously!). You can then go into your app, view your recent trips, and swipe left or swipe right to designate those trips as business or personal. Yes, it can be that easy (we didn't believe it until we tried it either). Easier than a dating app, even.
3. Don't do it alone.
Get a reliable system in place. As much as we'd like to do it all ourselves, the reality is it takes time and energy that we'd rather put into closing sales. At the same time, there are thousands of dollars to be saved by efficiently managing your business finances. When you get technology on your side, it takes away the weight and frustration of accounting and tax filing.
The best part of this is that you don't need a complex, expensive system, you just need one that is designed for 1099 independent contractors. That's the key. Use an accounting system that fits your unique needs as a realtor and helps you run your business more smoothly.
Want to give QuickBooks Self-Employed a try? We're offering 50% off your first 12 months (that makes it just $5/month!). Click here to try it out!