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 their 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.
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 expense 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 as every freelancer’s fantasy made manifest 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.
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.
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.
For you to avoid being flagged for a potential audit by the IRS, you need to sort out your receipts and identify which expenses qualify as business expenses. With the numerous receipts from meals, entertainment, and travels, 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.
Using receipt-tracking software for receipt management will make your business life easier. 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.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?