Technology offers several tools for people who operate a small business or who work as freelancers or independent contractors. These tools help improve productivity, increase profit margins, and protect the self-employed from legal and tax pitfalls. Additionally, the software programs and mobile applications are inexpensive or free, readily available, and easy to use.
Online business banking
It is imperative that anyone working as a self-employed professional in any capacity maintains a separate business bank account. The account is not only for accounting, but also for legal and asset protection. Online banking is ideal for professionals as it allows the account holder to access balances, transaction history, and other activity in real time. Furthermore, online banking services include notifications for suspicious activity, overdrafts, and other issues via mobile apps and alert systems. Finally, self-employed professionals can upload customer or client check images for fast, convenient payment.
Creating a business bank account offers other advantages as well. Establishing the account simultaneously establishes professionalism and recognition. The Internal Revenue Service may consider an enterprise a hobby and disqualify filings without a bank account to track expenses, deposits, and payments to vendors, suppliers, and related business entities. These transaction records confirm bookkeeping entries should the business owner undergo an IRS audit. Self-employed individuals who incorporate must establish a business bank account as per IRS regulations. Lenders and credit card companies will expect proof of a business bank account, as will vendors, suppliers, and contractors.
Substantiating income for the self-employed
Small business owners need proof of income for tax and credit purposes. An important step in providing proof of income and appropriate tax withholding is generating a paystub. The paystub is a primary tool for a self-employed person, especially to show state, federal, Social Security, and Medicare tax withholding. The document is essential when applying for a home lease or mortgage, car loan, or line of consumer credit. From a business standpoint, the issuance of a payroll check establishes credibility and possible tax savings. Business owners have several options to choose from when setting up payroll and pay stub services. The business owner may enlist their bank or bookkeeper if those entities offer the service. A multitude of reliable payroll service providers exist and are often conveniently available online. Using a free paystub generator for self employed individuals offers a legitimate cost-cutting measure that produces the same results.
Coordinating teams and managing projects
Two main reasons a small business owner should use project management tools are cost control and accurate billing. Disorganized, poorly planned projects waste time and materials, especially if they involve teamwork. Freelancers and independent contractors who charge by the hour can carefully and accurately record billable time and substantiate invoices. Not only should the business owner use project management tools but also employees should access them to coordinate among themselves. Using smartphone apps keeps parties connected. This system allows the business owner to track manpower and aids in calculating wages.
Project management software and mobile applications prevent wasted time and materials from depleting profits. The business owner can avoid costly mistakes such as assigning a crew to a work site hours before the scheduled material delivery time or allowing multiple employees to duplicate a task.
Tracking traveling expenses
The self-employed often overlook or misunderstand the work-related mileage tax deduction. The business owner can claim the deduction for use of a personal vehicle two ways, either per mile or as a percentage of expense. The IRS recommends using the simpler per-mile option. The agency provides its publication 463 as a guide to acceptable deductions when claiming expenses. Installing a mileage-tracking smartphone application for recording mileage and documenting the reason for the trip is a sensible method for documenting the per-mile claim.
Using technology to assist with tasks in these four areas of business management will ensure the self-employed operate with efficiency and profitability with less effort.