4 min read
Tax time can be stressful for the solopreneur. You’re in charge of your business, and also how you report taxes for it and you. Even if a certified accountant handles your taxes, using a tool to stay organized saves them time, which saves you money.
Capturing, categorizing and documenting tax-deductible expenses is essential for minimizing taxes and staying compliant. These tools can help you make sure no transaction falls through the cracks.
If you choose to prepare your own taxes, TurboTax is a powerful tool that’s been around for decades. It’s included in some versions of QuickBooks, making it easy to transfer data into various tax forms, or you can purchase it as a standalone product. Likewise, some versions of TurboTax include a year of QuickBooks for free. You can use TurboTax online or download the software to your computer for added security.
TurboTax has a suite of products suitable for individuals, real estate investors and the self-employed. The program asks you a series of questions and then recommends the best version for you. The most basic version allows you to file federal and state returns for free if you don’t have any attached schedules. But when you’re self-employed, your tax return gets more complicated.
TurboTax offers a Self-Employed version for $120 or a Self-Employed Live version for $200. The Live version puts you in touch with a CPA or an enrolled agent (EA) to answer your questions and review your return. If you need to file state taxes, there’s an additional fee in the range of $55. TurboTax includes a support guarantee if you get audited, offering to answer your questions and help you understand why you’re being audited, but they won’t represent you before the IRS. Their partner company, TaxAudit, offers an optional service called Audit Defense, which would give you representation from a licensed tax professional. Audit Defense costs in the range of $50 to $80.
If you just need to track your vehicle business mileage, MileIQ is a useful app for iOS and Android users. If you carry your phone on your drives, the app uses GPS to record your vehicle movement automatically. Then it prompts you to categorize each trip as personal or business.
MileIQ has a desktop dashboard for analyzing drives and printing reports by dates, locations or events. It also integrates with other expense-tracking programs, such as Concur and FreshBooks.
You can try out MileIQ’s free version, which logs up to 40 trips per month. The premium version is just $5.99 per month for unlimited miles. If you subscribe to Microsoft’s 365 Business Standard or 365 Business Premium plan, MileIQ Premium is included for free. Whether you submit mileage for reimbursement or claim it as a business-tax deduction, MileIQ will revolutionize how you keep track of your miles.
Even if you have an accounting program, you may want additional tools to help manage expenses while you’re on the go. There are some terrific mobile apps for iOS and Android that allow you to capture receipts and categorize tax-deductible expenses.
Just snap a photo of your receipt, and Expensify automatically transcribes, categorizes and saves it. Plus, the app integrates with other programs such as QuickBooks. When you take your phone in the car, Expensify uses GPS to track your mileage for calculating the vehicle tax deduction. You can try out Expensify’s free version and upgrade later for $4.99 per month.
While there’s a lot to know and track throughout the year, using one or more tools can make all the difference between feeling overwhelmed or in control at tax time.