Freelancers: What are your tips to make it easy to do expenses/taxes?
April 11, 2013 3:19 PM   Subscribe

I work as a freelancer, and have done so for many years. Which means I need to track all my expenses for tax time. I'd like to spend as little time as possible on this, both week-to-week, and at the end of the year. I'm in Canada, if that affects things.

I do a bunch of different freelance work - facilitation, consulting, writing. At the end of the tax year I total up all my expenses in various categories, and meet with a tax preparer, who I've worked with for a few years, and helps me put all those numbers into a return.

I run up millions of little expenses throughout the year - taxis, reference books, business meals, etc....

Increasingly, I find this process mind-numbingly boring. I used to do this using paper receipts. Then I moved to Quicken, and tried to do pretty much all my expenses via credit card or debit card, which helped. But now the weekly task of syncing everything in Quicken feels like a big hassle, and I end up not doing it. (I have, for a number of reasons, 6 bank accounts and 3 credit cards, and syncing all of them is a drag...) I'm thinking of using mint.com, which I gather is simpler.

I'd love any tips people have on how to make the process of tracking your expenses for taxes as easy and headache-free as possible.

I'm in Canada, if that affects things. (Among other things: It means our version of Quicken lacks the some of the automatic sync features that I gather exist in the US version....)

Thanks!!
posted by ManInSuit to Work & Money (13 answers total) 9 users marked this as a favorite
 
I use an iPhone app called iXpenseit to track all of my expenses. You can categorize them in the app - and whenever I make an expensed purchase, it gets added to the app. You can also take an image of the receipt, but I tend to just file the hard copy of it. I back the database up by emailing it to myself every month, which Gmail automatically files away for me.

At the end of the year, I can export everything into Excel and work with it that way.

That's about 90% of the work right there, I figure. I only really need to export it to Excel once at the end of the year.

I don't have a ton of expenses though, but it does seem like that might be a better solution than what you're doing now. There are other apps for other devices that would work jus as well, I'm sure - but I like iXpenseit.
posted by backwards guitar at 3:34 PM on April 11, 2013 [2 favorites]


I dunno...I itemize a lot of stuff and have some invoices, but my system is a lot simpler. I have an Excel sheet I designed for weekly expense tracking (for all my money, not just business expenses) and if it's a business expense, I both tag it in a category column and bold the relevant line. AT tax time I sort by tag and export that all to a year end summery sheet. I don't do any syncing to accounts or anything as I like being totally hands-on, so this might not be for you.
posted by Miko at 3:48 PM on April 11, 2013


Freshbooks does automated bank syncing (your bank may vary, obviously) plus you can attach images or PDFs of receipts. I use it for both invoicing and for tracking expenses and then just print out a report come tax time with everything categorized.
posted by marylynn at 4:24 PM on April 11, 2013


I use an app called XpenseTrkr. I have it track by year. I set up categories that make since for taxes later. Once a month, I back it up. And at the end of the year I pull it into Excel and sum the categories.
posted by amanda at 4:28 PM on April 11, 2013


Thanks for all this!!!

It sounds like some of these solutions would require me to input all my expenses at the end of the day (or the week). I don't think I have the discipline to do that. My hope (i think) is to find something that will automatically sync up with all my payments I make through my bank card and credit card, and let that be the basis of how I calculate my expenses for my taxes.

That said:

1) I'm glad to hear from anyone who wants to make the case that I'm wrong about this, and that I'd be much better off getting into the habit of entering expenses as I go.

2) I love the idea of something that lets me enter some expenes as I go (eg: a cab or restaurant paid in cash), and of doing some as-i-go categorizing on my phone during dead time. (From what I can tell - it looks like Freshbooks does that, at maybe Mint, too?)
posted by ManInSuit at 4:40 PM on April 11, 2013


I think all these apps that pretend to make things simpler are the next step up from a scam. I've freelanced all my life and just place receipts in about 10 folders my accountant told me to set up: categories like "supplies," "entertaining," etc. At the end of the year I spend about four hours adding up each category with a little calculator, and hand the result over to the accountant, with assorted other misc stuff that has accumulated. He does the rest, pretty simply. Sometimes doing stuff by hand is the easiest and most direct way, at least for me.
posted by fivesavagepalms at 5:05 PM on April 11, 2013 [2 favorites]


Well, with Mint you can do categories. Quicken had categories that you could do under a "tax" header. So, maybe with Mint you can make a big category "Business" and under that "Travel," "Dining," "Office supplies," "Equipment," etc..

I really like my app due to the ease of tracking mileage. I go to all my clients and take my meetings out so I have more mileage than anything else, really. It can memorize the mileage too (like "Home office" to "Print shop") and it keeps track of the per/mile rate.

I found that I was less likely to categorize thoughtfully when I had to dig out the data from all my other transactions. Though, getting an account that was separate from my regular account has helped that. Basically, though, it doesn't matter what account I use because I've got a record of it that is separate and just for business.

I think my app does an auto-backup to Dropbox as well. Do whatever works for you!
posted by amanda at 5:08 PM on April 11, 2013


I hand-enter every single receipt into one of two spreadsheets (personal or business) because it's very relaxing, whereas I suck at meditating. :-) For business, I've got about 12 columns that match up to what's on the IRS Schedule C. It takes me about 20 minutes a week. That said, I also use Mint, because it accurately records everything (except the rare $100 or so in cash I spend each year), and I only have to adjust and correct the categories every few weeks for a few errors it has made. Maybe 30 minutes a month. When I go to do my taxes, I find there's rarely more than a $20 discrepancy per category between my spreadsheets and Mint, usually because I've made failed to change a Mint "Restaurant" category to "Business Dining."

So, if you don't use cash much, Mint should be pretty useful for you.
posted by The Wrong Kind of Cheese at 9:25 PM on April 11, 2013


I have a shoebox and an email folder. I write a short note on the physical receipts about what it's for (no more than 3 words) and drop them in the shoebox. Purchases that email receipts go in the specific email folder. There's some pre-tax-time adding up, but it's not more than a few hours one day a year. (And I suspect my tax person would do it for me, but I don't have the heart to give them the bounty of my laziness.)

Really the best way is to have a credit/debit card that you you for all business expenses and only business expenses. Then it's all tracked up automatically.
posted by Ookseer at 9:52 PM on April 11, 2013


nthing the Mint recommendations, so long as you're OK with handing all your financial data over to Mint (I've decided I'm not, after a few years of using the service, not because of anything Mint did but rather from a growing distrust of such "free" services).
posted by seemoreglass at 7:40 AM on April 12, 2013


I don't have a dog in the fight with convincing you to expense track, but I'm pretty distractable and not super enthused about doing money stuff, and I find that by just doing it myself about every week to 2 weeks I actually prevent the problems and stress that come with trying to reconstruct the past once a year. It's far simpler, really. I also think I miss fewer deductible things (like mileage to attend some meeting or other) which don't really run through my bank accounts as such.

There's no bank/app automation system that's designed for my unique needs. I don't like the assumptions they make, as they don't match my categories, so I find you end up having to figure out how to do all the tweaking of settings you want anyway, by which time you are building your own system, essentially, and you've handed over all your data to a third party as well.

Plus my sense of cashflow is much better.

So for me, the benefits of expense tracking on a weekly-ish basis far outweigh those of trying to find an automated system that does exactly what I need it to do.
posted by Miko at 11:38 AM on April 12, 2013


miko - I think that makes sense. I definitely agree it makes sense not to leave it all to the end of the year. I don't mind checking in every week or two. My hope is that I can make that checking in process as quick and simple as possible, so maybe some level of automation to help with it. That's actually what I've been doing for a few years with quicken : sync my accounts with Quicken, then manually categorize the expenses. It worked well for a few years, but the system is starting to become burdensome mainly because I end up having a large number of bank accounts and credit cards, and the actual process of just *syncing* them ends up taking like 15 minute (I timed it today), and doing all that, just so I can then do the 5-10 minutes of categorizing expenses... I think that 15-minutes of tediousness had been just enough to break me out of the habit of doing this regularly. I'm hoping to find an easier process....
posted by ManInSuit at 9:40 PM on April 12, 2013


Okay. Here is what I am going to try and do, based on suggestions here:

1) Start using mint
2) Don't wait to the end of the year, but check in every week or so and:
a) File away the paper receipts
b) Itemize the week's expenses in Mint


Mint's reporting is terrible-to-nonexistent it seems, but it looks like I can export everything into a very CSV, from which I can then very easily to whatever number-crunching I want in Excel/Access. I did this for parts of the last tax year (not everything was in mint) and it seemed to go very smoothly. Will be a lot smoother with weekly check-ins...

I'm psyched! I feel that from the folks here I've got a solution that has the right mix of automation and discipline/habit. Let's see how it works our over the coming year(s).
posted by ManInSuit at 7:50 PM on April 16, 2013


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