Having a side-hustle can be a fantastic way to earn a bit of extra cash, or develop into a lucrative income.
However much money you are making from it, you need to make sure that you are following the rules when it comes to recording your income and expenses. Here are some tools you might want to consider to keep you on the right side of the IRS.
A business bank account
Don’t use your personal account for the money coming in and going out of your business. It can get very complicated and you will spend a lot of time trying to identify which transactions belong in your accounts and which do not.
Instead, open a business bank account and keep all transactions in one place. There are many basic accounts on the market that you can run completely from your smartphone and are perfect if you receive all of your income electronically, rather than in cash.
When it comes time to do your accounts, there are many accounting services for small business that will be able to prepare your business accounts for you so that you know where you stand in terms of tax, etc.
Accounting software
A simple accounting package will help you keep on top of your accounts so that when you have to file your returns, it’s much simpler. If your business deals in simple transactions, then it can be all you need to prepare your accounts yourself.
Some of the most popular software includes Quickbooks and Zoho Books. These are cloud based and can be run on apps on your phone or tablet.
Expense tracking/receipt storing
The wonders of modern technology mean you don’t have to keep boxes full of receipts anymore. There are expense tracking apps for your smartphone which you can use to snap a picture of a receipt or save it electronically from your email. An image of each receipt is stored alongside the relevant transaction. Many of the main expense tracking apps integrate with accountancy packages so that transactions can be recorded on your accounts immediately, no stacking up piles of expense receipts to try and do at the last minute.
Talk to a tax professional
While it has never been easier to record and categorize transactions, it still makes good sense to talk to a tax professional. They will be able to guide you to make the best decisions to legally minimize your tax liability. They may also be able to point out some tax breaks you might be entitled to. For example, many people who use their home to work from, are entitled to a tax break, but many people don’t claim it as they aren’t aware of it, or find it too complex.
Conclusion
Online banking and accounting software make it easier than ever to record and track your side-hustle finances. It can help you keep on top of your money and quickly and accurately file your tax returns. With some professional advice, you really will be able to make the most of your finances.
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