cheap upwork accountant VS doing it yourself

[illbill]

Freelance graphic designer, no idea what I'm doing with taxes/accounting. Currently work a full time job but I want to freelance on the side.

Does accounting software like quickbooks or wave take care of taxes as well? Does it know if I need to do quarterly reports or just yearly? Does it know who I need to pay taxes to: local,state, federal? Does it know how much I need to pay in taxes?

Should I trust a cheap worker from India on upwork to take care of stuff like this for me if I have no idea what I'm doing? I'm pretty good with computers and wouldn't mind doing it myself if I knew what I was getting myself into. I just don't want to **** anything up and get fined by the IRS :)

What do you do? What do you recommend?

[Harold Mansfield]

Should I trust a cheap worker from India on upwork to take care of stuff like this for me if I have no idea what I'm doing? I'm pretty good with computers and wouldn't mind doing it myself if I knew what I was getting myself into. I just don't want to **** anything up and get fined by the IRS :)

What do you do? What do you recommend?

No, of course you shouldn't "just trust" anyone with your accounting. Never outsource your money.

Since this is a side endeavor the easiest way at the moment is to just be a sole proprietor. It's not much different that what you're doing now. You just account for the additional income as a side business. Since there are no employees your taxes should be easy to figure out.
https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships

Some accounting software like Quickbooks will help keep track of expenses, but more than anything it will help you look a little more professional to send out professional looking proposals, invoices and so. The online version is a little more affordable than buying it outright, and you don't have to worry about buying a new version every year or 2. Sometimes Quickbooks is a little more cumbersome that most one man show, service based businesses need.

You should also check out Freshbooks.

Also, don't be scared to speak to the IRS. They are very helpful these days and have a ton of resources to help you. They want you to get it right too.

[PZagotti@ZnBcpa.com]

Some accounting software packages do have some tax functions but it has to be setup correctly and the software may not be able to handle all your tax reporting requirements.

First question is if you know exactly how you setup your company and if you filed all the paperwork with all the various government agencies. If you do not know what kind of company you have and how you set it up then you may want to contact a CPA to get a better handle on exactly what you have and what reporting requirements you are looking at. Most CPAs will even be able to help you construct a list of accounts so that you can track the expenses that are specific to the kinds of reports you will have to file.

Since you stated you just started a small part time company I would advise against outsourcing your bookkeeping for three reasons.
1) Small companies do not have lots of expenses to enter so bookkeeping should take very little time.
2) You really need to have a good handle on your expense and revenue when you are first starting out.
3) You probably need to spend your available money on important things like marketing and equipment.

Generally CPAs are not that much more expensive then EAs or getting your taxes done at one of the strip center tax shops that close after April 15 so don't let fear of price throw you.
FYI when you are running a business those tax shops are not a good option. The people who work there just passed a short multi-question test and are in no way qualified to counsel you on things like tax planning, entity formation / management or payroll law / tax issues. They only fill in blank spaces in a computer program based on what you tell them.

As for accounting, the answer is: it depends on your specific needs.

Now for the discloser, Zagotti & Burdette is registered with all the below mentioned companies because over the years clients have come to us using all the system below. As a result out opinion is unbiased and based on real world use.

When it comes to advise on choosing a platform we are only interested in finding a good fit for your specific need.

FreshBooks is good if you are a solo who just needs to keep track of time and do some basic billing. But understand that FreshBooks is not a full accounting system. It has no true balance sheet, dose not track assets and multi user setup on almost non existent.

Xero is a good all full functioning online accounting system. In my opinion the bank rec module is better then QuickBooks, (QB) and it tracks assets, which QB online does not. It also has a good payroll system embedded with it too. With that said Xero does not have as many add-ons as QB.

QuickBooks is the 900 pound gorilla on the market. QB on line is really the service that most small businesses will generally want to use. It does not have assets management and the payroll function can be purchased at an extra cost. It does have a lot of add-ons so if QB can not do something there is probably a 3rd party add-on that can be added for a fee.

CheqBooks is another good online accounting system. It offers the same basic functionality as QB and Xero. The cool thing about it is that it will make transaction coding suggestions based on other users previous decisions. Since it is not as well known there are less add-ons on the market for this service.


Most of the systems discussed above run in the $15 to $45 dollar per month range. Just remember that all the system discussed are online which means that the companies are backing up your data, automatically delivering system updates and you don't have to worry about your computer crashing and you loosing all your data.

Now there is one other option and that is no accounting system at all. If you have a business bank account and you put all your deposits and purchases through that account, (no or few personal transactions) you can usually export the data at year end to excel and quickly turn it into a P&L.

Thanks

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[tallen]

I'll just add that to get the most bang out of bookkeeping software (like QuickBooks), you do need some basic understanding of accounting principles and how it all applies to your business. For example, you want to make sure that your "Chart of Accounts" has all the appropriate accounts that you need for tracking and reporting your business. While the default options available may well be adequate, one could also choose to work with an accountant to help you get your database and your procedures set up -- you're not turning it all over to them, just tapping into their knowledge and experience to get you started.