QuickBooks Self-Employed: Maximizing Deductions for Clients

Business owners do not want to pay more in taxes than they are required to pay; however many do not understand how to track or document expenses to take full advantage of legal deductions.

Tracking cash expenses and mileage can be difficult for Schedule C clients, since doing this properly requires documentation and accumulation of information throughout the year. Clients can estimate these expenses, but that makes them vulnerable to errors and possible tax penalties if they are audited.

Business owners can use their smartphone to download the QuickBooks® Self-Employed app to manage cash expenses and mileage. This app has many features for the person on the go; two features that I find especially useful are Mileage Tracking and Snap & Store.

Mileage Tracking

Using Mileage Tracking, the user can identify if the trip was business or personal. either on the smartphone or on a computer, but this identification is not required immediately. Classifying trips on the smartphone is done by a “swipe” to the right for personal trips or a swipe to the  left for business trips.

Once a trip is identified as business, you can enter a trip purpose for future reference. Business mileage expense s are then added the top of the mileage screen. If the smartphone is not present during the trip, you can manually enter business trips and, of course, there is no need to enter personal trips. This total number of business miles is also available in the vehicle deductions section of the tax summary report.

Using the mileage tracker, business owners can capture trips easily and efficiently, removing the burden of documenting mileage. This feature also enables accountants to easily determine business mileage with supporting documentation for the deduction.

Snap & Store – Used for Cash Expenses

Cash expenses are difficult to track if you do not keep the receipts or make a note of the amount; as you know, this is an issue many business owners struggle with. Keeping receipts can be messy and cumbersome, and even if your clients do manage to keep the receipts, they will have to take the time to enter the transactions in their accounting system. Many business owners bundle these receipts for their tax preparer to summarize and enter, or worse yet, ignore them assuming they are not a significant expense.

Using the QuickBooks Self-Employed app, the Snap & Store feature allows the user to take a photo of the receipt and classify the transaction easily. The process is quite simple: select Snap & Store icon at the bottom of the transaction screen.

Align the receipt and take a photo using the camera icon at the bottom of the screen.

The photo can be rotated and cropped, making the image easier to work with. When complete, select “done” and then “use this photo.”

Once it is processed, the receipt will appear in the transactions screen with the amount, date of the receipt and the vendor name inserted. This saves the user valuable time; the transaction will also have a paperclip icon to signify there is an attachment and the description of the source will be identified as receipt scan.

Using the Snap & Store feature, business owners can document cash expenses. This an easy method for documenting receipts. Imagine if a client walking in the door with a box of receipts to be summarized, can be shown the feature. Hopefully, next year, that same client will be even more organized! 

As shown above, the QuickBooks Self-Employed app helps business owners keep well- documented records using mileage tracking and the Snap & Store receipts feature. QuickBooks Self-Employed uses technology to simplify recordkeeping, enabling business owners to manage their time while having timely access to information that helps them run their business.

Editor's note: This is the first in a series of four articles by Ilene Eisen on QuickBooks Self-Employed. Be sure to read her other articles in this series: