QuickBooks Self-Employed: The Best Finance App for Business Owners

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Is QuickBooks Self-Employed the best finance app for business owners? Check out this in-depth review for 2017!

As someone who was a small business accountant for over 10 years, I’ve had a lot of experience with Intuit’s QuickBooks software.

And to be honest I never really liked QuickBooks. The desktop software was clunky and geared more towards inventory-based businesses.

But as the years have progressed so have the offerings from different Intuit programs. Now they offer QuickBooks Online and a newer QuickBooks Self-Employed for small business owners.

Both of these are more innovative with features that have evolved with how we do business today.

As freelancers we have a lot of options to choose the best accounting software. From FreshBooks Cloud Accounting, to GoDaddy Bookkeeping, to Xero Accounting, and now QuickBooks Self-Employed. So I’m throwing away my past conceptions about QuickBooks and diving into their new service: QuickBooks Self-Employed.

Here is my honest review! Learn how you can use it to keep both your personal and business finances organized and tax-compliant.

What is QuickBooks Self-Employed?

You’re likely already familiar with the traditional QuickBooks Online, so what makes QuickBooks Self-Employed different? Well, it’s basically a much better and simpler version of QuickBooks Online. And it has a very specific focus on small businesses and self-employed individuals.

As a sole-proprietor you probably mix your business and personal transactions interchangeably. You are YOUR business (at least for tax purposes) and this fact can get a bit messy at tax time. QuickBooks Self-Employed (QBSE for short) provides a solution to this problem.

Speaking of taxes, QBSE helps you estimate and pay your quarterly taxes, which is not a common feature among small business accounting software, so it makes QuickBooks Self-Employed especially appealing.

QBSE account dashboard

It automatically imports your transactions from any linked bank accounts or credit card. You can then categorize them in pre-populated Schedule C categories. This makes it super simple to print reports and prepare for tax season.

QBSE is a web-based app and iOS app that you can access anywhere you have an internet connection.

Here’s a brief snapshot of the benefits and features QuickBooks Self-Employed:

  • Great for commingling personal and business transactions
  • Securely and automatically imports transactions
  • Categorizes income and expenses for Schedule C
  • Accurately calculate and pay quarterly estimated taxes
  • Track business profit and loss for the last 6+ years
  • Record business miles to and from client meetings
  • Print off complete tax summary and other reports
  • Costs $4.99 per month (and is a deductible business expense)

TRY QUICKBOOKS SELF-EMPLOYED FREE FOR 30 DAYS

Get started with QuickBooks Self-Employed

If you’re like me, and you’re not sure if QBSE will work for your freelance business. The good news is that they offer a free 30-day trial so you can test it out and see if it works for you. No stress!

1. Link your bank and credit card accounts

When you first get started with QuickBooks Self-Employed you’ll be prompted to link your bank accounts. In the event you use Mint.com you can import all those transactions for the entire year.

Intuit owns QuickBooks, TurboTax and Mint so it’s super easy to bridge that gap. And it won’t affect your Mint or TurboTax accounts, so you can still use them for your everyday personal finances.

QBSE getting started

QBSE syncs with all the major banks like Capital One Spark Business, Chase, Discover as well as PayPal, and other credit card accounts. You can also add or remove accounts later. It will import all those transactions for the past year.

connect other bank accounts

To link your bank account, just type in your bank’s name in the search field. Then enter your login information and select the correct accounts. The whole process only takes about 30-45 seconds.

2. Categorize business and personal transactions

Once your transactions are all imported you’ll have to spend a good bit of time categorizing them. All categories are pulled from Schedule C . This is nice because you won’t have to reorganize them when tax season comes around.

Here’s a list of the Schedule C categories. You can use this checklist when filing your taxes as a sole-proprietor and self-employed individual.Schedule C expenses breakdown

One time-saving feature is that you can create Transaction Rules. When a particular vendor expense clears your bank, or you deposit a check, it will always be categorized the same way. Depending on how many transactions you have each month, this can save you a ton of time!

The one drawback that I’ve found, however, is that you can’t add different categories if you want to customize your own transactions.

3. Set up your personal tax profile

By clicking the Settings button in the top right-hand corner. Here, you can access all the features that QuickBooks Self-Employed offers, including your tax profile.

Filling this out will enable the software the more accurately calculate quarterly taxes based on whether or not you’re Married Filing Jointly or Single, as well as how many dependents and exemptions you’re claiming.

This is the first accounting software I’ve seen that allows for such an accurate calculation of quarterly taxes.

Most of the time you have to set up an appointment with your accountant to personally calculate your estimated tax payments to get a figure this accurate. No more overpaying for your QETs come tax time!

QBSE tax profile

4. Export transactions and create reports

Once you’ve categorized your income and expenses, and set up your tax profile, you can then create and print reports. Or export and download all the transactions to a spreadsheet CSV file. This can then be shared with your accountant or kept for your records at the end of each month.

QuickBooks Self-Employed offers three types of reports:

  • Profit and loss – This report summarizes income and expenses, so you can see if you’re in the green or red. It’s also called a P&L or income statement.
  • Tax summary (PDF) – This is a simple self-employment ledger that summarizes income minus deductions to get your taxable business profit. It then gives totals for spending and deductions in Schedule C and healthcare categories.
  • Tax details (Excel) – This tax report contains a similar overview of information, like the Tax summary, but also gives detailed transactions by category.

5. Record business miles for meetings

If you’re a freelancer who hosts drives a good distance for work-related projects, then you’ll really like this feature. QBSE helps you save money on taxes by logging and categorizing your business miles for different trips.

Start by adding details about your vehicle, like the make, model and date you purchased it. Then add your mileage based on actual miles or estimated odometer readings. You can then track and log your trips automatically via the iOs app, or add them to your dashboard later.

QuickBooks Self-Employed pricing plans

As I mentioned, you can test out the QuickBooks Self-Employed accounting software for free with their 30-day trial. After that time period, here are the current prices you’ll pay each month.

QBSE prices

  • Basic: for $5 (normally $10) a month you can access the basic bookkeeping software that syncs your personal and business transactions, accurately categorize and maximize your Schedule C deductions and calculate quarterly tax payments.
  • Tax Bundle: for $12 (normally $17) a month you’ll be able to access all the basic bookkeeping features in the basic plan, plus have the ability to pay quarterly tax payments online and file your Schedule C taxes online for free.

Now here’s where it gets really fun!

When you pay for the QBSE + TurboTax Bundle you get to file your taxes online for free. Yep, $12 a month gives you access to BOTH QuickBooks Self-Employed and TurboTax Self-Employed (saving you $11 a year in the process).

Don’t believe me? I wrote an entire post about how to use this hack to file self-employed taxes for free.

TRY QUICKBOOKS SELF-EMPLOYED FREE FOR 30 DAYS

(NEW) QBSE invoicing features added

In October 2016, Intuit announced in a press release that it’s adding invoicing functionality to the QuickBooks Self-Employed web and mobile app. This will make a huge difference in helping self-employed business owners get paid faster.

Invoicing has been the top requested feature from QBSE users, and something I’ve been waiting from them for a long time. Now, QuickBooks Self-Employed users will be able to take advantage of functionality that QuickBooks Online users have had access to for a while.

The new invoicing feature allows you to:

  • Send professional invoices on the go – You no longer need to worry about how to properly format and fill out an invoice outside of QBSE. This new feature makes it easy to create and send professional invoices with just a few clicks. Then you can immediately send it to your clients, even if you’re not at home in front of your desktop.
  • Summary of invoices and payments – As someone who uses QBSE, you can also view a summary of invoices that have been sent, providing a quick snapshot of the money you’ve been paid or owed. This can come in extremely handy during tax season when you need to add up your income for the year.
  • Get paid faster with online payments – No more chasing customers for checks or waiting in the line at the bank. As a QBSE user you can offer your clients many different options to pay their invoice, such as credit card or electronic check, right from the invoice.
  • Follow the money with SmartInvoice – This new feature is all about helping people get paid in days, not weeks. Coming soon to QuickBooks Self-Employed, SmartInvoice will notify you about what’s happening with your client invoices every step of the way. You’ll know immediately when a client views the invoice and when it’s being processed for payment.

What would make QBSE better?

While QuickBooks Self-Employed does offer a lot great features for freelancers and small business owners, it still feels incomplete. There are a couple drawbacks.

It doesn’t have any way of tracking client address and contact info or tracking time spent on each project. It offers no in-depth reports for client management or time tracking.

You also can’t edit the transaction amounts. So if a net payment is deposited, you won’t be able to record the gross amount or get the deduction for the fee you paid. This can mess up your gross versus net transaction figures and throw off your 1099 amounts at the end of the year.

While QuickBooks Self-Employed boasts the ability to separate your business and personal income, it doesn’t go as far to allow you to categorize them. There are only two income categories: Business and personal, that’s it.

There’s no way for you to distinguish how much you earned from a particular income stream and it doesn’t allow for personal spending categories.

So in essence, QuickBooks Self-Employed is best used for bookkeeping purposes like:

  • Categorizing your income and expenses
  • Creating and sending invoices
  • Preparing financial reports for tax time
  • Calculating and paying quarterly estimated taxes

Is QBSE the best finance app?

The short answer is; yes. With the release of some of these new features, QBSE is getting closer to being an all-inclusive accounting program for freelancers.

Plus, when used in combination with TurboTax Self-Employed you can file income taxes for free!

Still, after testing out QBSE for my own freelance business, I’ve found that it doesn’t work for my needs. The one feature that I do think is very appealing for using the QuickBooks Self-Employed software is that you can very accurately calculate and pay your quarterly taxes. Or perhaps track business miles and streamline your Schedule C tax filing.

Want to test it out yourself? Click the button below to sign up for a free trial!