#ACCOUNTING FOR CONTRACTOR EXPENSES HOW TO#
#ACCOUNTING FOR CONTRACTOR EXPENSES PROFESSIONAL#

If you are purchasing a music subscription that you also use in your yoga classes, expense the service as 'Dues & subscriptions.' However, if you are purchasing a subscription to online courses to enhance your skills in your profession, then you are using that for “Professional Education” – and should categorize the expense as 'Training.' Lastly, if the service you are purchasing is specific to your business, you can categorize it as 'Professional Services,' no matter if it is purchased online or offline. When purchasing subscriptions for an online service, determine what the service provides to your business, and categorize the expense based on that.

#ACCOUNTING FOR CONTRACTOR EXPENSES PROFESSIONAL#

If you are a jewelry maker who buys a case of beads to make and sell bracelets, categorize them as 'Inventory.' However, if you are a babysitter who buys a case of beads to make crafts with kids, categorize them as 'Materials & Supplies.' Dues & Subscriptions and Professional Education On the other hand, if you purchase illustrations, fonts, or stock images, the correct category for them would be 'Media Purchases.' When buying items like beads, categorize them depending on how you use them. “Materials & Supplies” may also include raw materials used to make products you sell, such as wax for candles or fabric for clothes. Here are some examples: Inventory and Materials & SuppliesĪn expense for “Materials & Supplies” would typically include any tangible items used to produce your products, such as pens and pencils for a tutor or paintbrushes for an artist.

The same item may have different categories for different types of businesses. The categorization of expenses should depend on how you use the subject of the expense in your business. Categorizing Business Expenses for Independent Contractors

#ACCOUNTING FOR CONTRACTOR EXPENSES HOW TO#

This article aims to provide you with a detailed understanding of bookkeeping for independent contractors, including how to categorize expenses, the importance of using an independent contractor tax organizer, and how Lunafi can help you manage your bookkeeping needs. However, deciding on expense categories can be a challenging task, particularly if you do not have a bookkeeper to assist with your independent contractor accounting. As an independent contractor, keeping track of your business expenses is crucial to managing your finances and ensuring you are claiming all possible deductions on your tax returns.

Accounting for contractor expenses