Quickbooks self-employed: Everything you need to know

Wise
20.04.20
4 minute read

If you are self-employed, you're obliged to submit a Self Assessment tax return by sending a form to HMRC either on paper or online. The information on the tax return is used to calculate your tax liability.¹ However, tax filing is not the most exciting part of running a business and if you’re a hands-on entrepreneur, you might not have the time to keep track of your income and expenses prior to completing the tax filing which is why you need a tool like Quickbooks Self-employed (QBSE) to do the job for you.

This article will give you a better understanding of how QBSE works and what you could use it for. We’ll also introduce a way to collect payments from international clients for free using Wise Multi-currency account.

How does Quickbooks Self-employed work?

Unlike other Quickbooks products, the self-employed version focuses on tracking income and expenses to help sole traders, freelancers and self-employed on Self Assessment tax returns filing. There are a few accounting features included but the overall service is made like a tax software.²

What you can do:

  • Organise your business spending.
  • Maximise your business deductions.
  • Claim a mileage deduction by tracking the business miles you drive.
  • Help you figure out your business profit.
  • Calculate your estimated tax payments.
  • Put your expenses into the correct Schedule C categories.
  • Export your records to an easy-to-read Schedule C.

Using QBSE, you’ll be able to connect your card, bank accounts and PayPal account. It’ll automatically track the incoming and outgoing transactions of the connected accounts. You can separate and label personal and business transactions or split them between the two. You can also add a rule to past transactions based on how you’d want them to be categorized for the future. It also estimates your quarterly tax payments and gives annual tax data.

How much does it cost?

QBSE’s for freelancers and independent contractors (Self Assessment) costs £8 a month. ³ The features included in this version are:

  • Track income & expenses
  • Send unlimited invoices
  • Track deductible mileage
  • Snap & sort receipts
  • Connect multiple bank accounts
  • Free mobile app
  • Separate business & personal transactions
  • Estimate income tax payments
  • Complete HMRC Self Assessment
  • Free Chat Messaging Support

How to connect your bank account to Quickbooks?

Your recent bank transactions get automatically downloaded to quickbooks when you connect your bank or card account.⁴ You can do this on a browser or through the mobile app on iphone and Android devices.

Here’s how to do it on a browser:

  1. Go to the Settings icon, and then select Bank accounts.
  2. In the search box, enter the name or URL of your bank. Then select Continue. If you've already connected an account before, select Connect another.
  3. Enter the sign-in info you use for your bank's website.
  4. When you’re ready, select Connect securely.

Quickbooks will automatically categorize your transactions which you’d need to approve before you proceed. If you need to change anything, you can create a rule for certain transactions. Here’s how to do it:

  1. Select Settings and then Rules.
  2. Select Create Rule.
  3. In the Description field, enter the customer or vendor you want to create the rule for. Select to check the Match exactly checkbox if you want QuickBooks to only use the rule when transactions match exactly.
  4. From the Account drop-down menu, select the account you want transactions to go into.
  5. From the Type dropdown, select Business, Personal, or Split.
  6. If you want QuickBooks to categorize transactions, select the Category link and choose a category.
  7. If you the rule to apply to transactions you've already categorized, select to check the Also apply to past transactions checkbox.

If you can’t find your bank through the name or URL, the only workaround is to import the statement manually. Most banks allow you to export transactions to .CSV. If you've been using a spreadsheet to track transactions, you can save or export the file to .CSV format.

Here’s how to import it to Quickbooks:

  1. Go to the Settings icon, and then select Imports.
  2. Select Import older transactions on the right for the account you want the transactions to belong to.
  3. Follow the instructions onscreen to finish importing your data.
  4. Select Import.

Invoicing through QBSE

One of the most important benefits of Quickbooks Self-employed is the invoicing feature. This allows you to send invoices to clients automatically and keep track of them. Here’s how to make an invoice using QBSE:

When you create your first invoice, QuickBooks will ask you to enter your business details. You only need to do this once. This is where you choose the default name, email, address, and logo your customers will see when they get their invoices.

If you need to change your business details, simply select Edit work info on any invoice.

  1. Select Invoices from the menu, then select Create invoice.
  2. Enter your client's name, address, and email address.
  3. Decide when you want to be paid by and set the date in Due Date field.
  4. Select Add work to add the product you sold or service you performed. Enter a description of the service.
  5. Select Flat rate or By hour from the drop-down menu. Or select By item if you're charging for a product. Then enter an amount.
  6. When you're ready, select Add to invoice.
  7. To add more items to the invoice, select Add work.
  8. Add your bank details where you want to receive the payment to. You can also add your preferred payment method (credit or debit card/bank transfer).
  9. You can select a custom invoice number and create a unique message. These are both optional. If you don't pick anything, QuickBooks will use the defaults.
  10. When you're ready, select Send invoice to email your invoice. You can also select the arrow and Preview to see what your customer will receive.

How to collect international payments for free?

If you have international clients, it's always easier to present the invoice in their local currency. However, banks usually don’t support payments in different denominations to a single bank account. This means that your clients would have to make an international payment to your account which can be quite expensive for you and your clients due to poor exchange rates, intermediary fees and receiving fee.

To avoid these fees, get paid using Wise multi-currency account in your clients local currency. This way you could avoid receiving fees and get paid like a local. You can send, hold and convert over 45 different currencies.

You can also take advantage of the following benefits:

  • Real exchange rate with no mark-up
  • A linked multi-currency debit card
  • Direct debit for EUR and GBP payments
  • USD global - pay overseas contractors in USD
  • Linkable to accounting software such as Xero
  • Automated batch payments tool for running payroll and payments to overseas contractors
  • Open API to save you time and streamline the process.

You can also export a .CSV file for your transactions from Wise and import them to Quickbooks Self-employed.

Open your multi-currency account today, and start saving time and money!

Sources:

  1. gov.uk - self-assessment tax returns
  2. Quickbooks help articles
  3. Quickbooks website - Self-employed
  4. Quickbooks help articles

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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