Tax season is hardly ever exciting, but for self-employed workers, it can seem particularly overwhelming. Large businesses can afford to hire accountants to get their paperwork in order. In contrast, as an independent contractor, you’re responsible for tracking your spending, storing your receipts, and tax filing. Manually tracking your expenses with a template can easily become cumbersome.
Worse yet, you can lose saving opportunities. When you track your expenses manually, you can fail to find some potential tax deductions. And in effect, you may lose money that would have been best spent growing your business. That's where a tax deduction tracker comes into play.
In this guide, we’ll look at Bonsai Tax-- the best tax deduction tracker -- and how it can help solve your biggest tax headaches.
Note: Freelancers who use our tax software saves on average of $5,600 on their tax bill. Our app can help you maximize your write-offs and save you a load of money during tax time. Claim your 14 day free trial here.
When trying to make the most use of tax write-offs, you’ll often find yourself wearing many hats. You’ll need to keep records of all your expenses -- both personal and business-related. You can do so by keeping a ledger, or if accounting isn’t your forte, you can store all your receipts in an envelope.
You’ll also act as your own accountant. This means you’ll have to sift through lots of credit card charges and receipts to find purchases that were legitimate business expenses and look for any possible tax deductions.
The problem with this approach is twofold. First, as your purchases rack up, you’ll often lose track of where your money is going. Second, you risk losing lots of billable hours -- and opportunities to win more business -- every tax season.
If this situation sounds too familiar to you, then it’s time to shift to a 1099 tax write-off tracker. Read on to find out some of the perks you’ll enjoy by using Bonsai for all your tax needs.
If you’re like most self-employed workers, then taxes probably inspire a special blend of boredom and doom for you. But it doesn’t always have to be this way; Bonsai Tax is the best tax software to make payments to Uncle Sam more bearable.
Bonsai Tax is an easy-to-use platform that helps self-employed workers, freelancers, and independent contractors like you remain organized and tax compliant.
The platform is designed to automatically identify deductible expenses, allowing you to maximize self-employment tax savings. It imports all of your expenses from the connected credit cards and bank accounts. Then, it scans your transactions to get any potential write-offs.
The software also categorizes your expenses according to their deductible potential so that you can get a better understanding of your spending. To top it off, it helps fill out a large part of your tax returns, while sorting your qualifying expenses into visual graphs for deducting.
On your end, you’ll only need to scan your receipts after every purchase, so you won’t have to go through the hassle of storing age-old paper receipts. Some of the best apps for tracking receipts for taxes, like Bonsai, can help you clear your clutter of receipts.
But automation is just one way of tracking your write-offs. Bonsai Tax also offers a free 1099 excel template that you can customize to fit your business needs. And you don’t need to know all the nuances of accounting to fill out the spreadsheet; it comes with comprehensive instructions that can help you categorize each expense properly.
Granted, the template doesn’t come with all the bells and whistles that the expense tracker offers, but it’s perfect if you’re running a small business with a tight budget.
Keep in mind that as your business grows, then you’ll be better off paying a small fee to access the more comprehensive premium solution. It will help free up time so that you can focus on winning more clients -- not to mention the peace of mind it will offer you.
Note: Seriously, save yourself a lot of headaches and avoid paying taxes (legally, of course) with Bonsai Tax. Our app will scan your bank/credit card statements to discover potential tax write-offs. Users on average save a whooping $5,600 from their tax bill with our software. Try a 14-day free trial today.
Bonsai Tax has a simple appeal: it offers more bang for your buck than most tax software. Not only does it make claiming tax write-offs more straightforward, but the freelancer app also provides other features that make your solopreneur life much easier. Some of these features include:
Test drive the software today and uncover how much money you'll save on your taxes.
When you’re self-employed, there’s a wide range of business expenses you can deduct and tax hacks you can take advantage of. Some of which may go under your radar when you’re calculating your deductions manually. The tricky part is distinguishing personal expenses from business-related spending. But Bonsai Tax can do most of the hard work for you.
Some business costs you can write off include:
Updated laws now allow you to deduct 100% of your meals, provided the meal was only for business purposes. If you decide to conduct business either by visiting a restaurant or ordering food, then you can claim the business meal deduction. Bonsai Tax can help you track all your business meals to ensure you receive your 100% deduction.
The home office deduction only applies if you conduct business from your home. It’s common with freelance writers, photographers, and developers, who often dedicate some space in their homes to focus on work. Some of the home office expenses you can deduct include repairs, home insurance, renters insurance, and rent. Alternatively, you can use the simplified method to claim a home office deduction.
If you’re traveling to attend client meetings or deliver products, then you can write off travel expenses. Note that your travel needs to be business-related, and you must have been away for at least one business day.
Bonsai, one of the best travel expense trackers, can help you expense 100% of your spending for flights, car rentals, and hotels -- and 50% of your meal costs when traveling.
Chances are high that the internet plays a big part in your day-to-day business. The IRS allows you to deduct your entire phone and internet bill on your income tax return.
And if you don’t own a dedicated line for your business, then you won’t claim the entire cell phone tax deduction; you’ll only claim the percentage you use for your business.
Sometimes you may need to take some extra courses to grow your business. The IRS allows you to claim education deductions for such an expense. These can include everything from tuition fees, book costs, to commuting expenses. The deduction only applies when your education helps you improve your present business.
If you want to know more about the write-offs available to you, then you can check out this comprehensive list of the best 1099 deductions for independent contractors.
Tracking and calculating your deductions doesn’t have to be a hassle anymore. You can let Bonsai solve your biggest tax headaches by signing up today.
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?