As a freelancer or side hustler, managing your taxes can be challenging, especially when juggling multiple clients, projects, and income streams. Here are some essential tips to help you file your taxes efficiently and accurately, with a focus on utilizing the best accounting, bookkeeping, and expense management software to streamline the process.
1. Keep Detailed Records of Expenses and Earnings
One of the most critical aspects of filing taxes as a freelancer or side hustler is maintaining detailed records of all your income and expenses. This includes invoices, receipts, bank statements, and any other documentation that shows your expenditures and earnings. By keeping organized and up-to-date records, you can ensure accuracy in your tax filings and take advantage of all possible deductions.
Leveraging Veryfi OCR can significantly enhance your record-keeping. Veryfi Lens and Veryfi OCR automate the process of capturing and organizing financial documents, reducing the manual effort required. With Veryfi OCR, you can scan receipts and invoices using your smartphone in real-time, instantly digitizing and storing these documents securely in the cloud. The technology automatically extracts data such as dates, amounts, and vendor names, categorizing expenses to provide a clear overview of your finances. This not only saves time but also minimizes the risk of errors. By using Veryfi OCR, you can ensure that your records are always up-to-date, accessible from anywhere and ready for tax season. This would allow you to focus more on your freelance or side hustle business.
2. Use Powerful Accounting and Expense Management Software
Using accounting software can significantly simplify your tax filing workload. Here are some top software options — all powered by Veryfi OCR API. Thanks to Veryfi, every software on this list provides fast, accurate, and AI-powered data extraction for your financial documents in over 38 languages across over 110 data fields and over 91 currencies. For example, every bank information field can be extracted with ease so you don’t need to manually input the fields into a spreadsheet or do any manual calculations. This enables you to see exactly what’s going into and out of your small business.
Rydoo
Rydoo is an expense management software that simplifies tracking and managing expenses. With Veryfi’s OCR integration, Rydoo can quickly scan receipts and automatically categorize expenses, saving you time and reducing the risk of manual errors.
Zoho
Zoho Books offers comprehensive accounting and bookkeeping solutions tailored for freelancers. Its integration with Veryfi’s OCR API allows you to scan receipts and import data directly into your accounts, ensuring that all your financial information is accurately recorded.
Zeni
Zeni is another excellent option for freelancers and side hustlers, offering a combination of bookkeeping, accounting, and expense management services. Powered by Veryfi’s OCR technology, Zeni provides a receipt scanner that automates the expense filing and submission process, helping you stay organized and compliant with tax regulations.
Veryfi
Veryfi began with a straightforward mission: to simplify expense management for individuals and businesses alike. Starting as a humble expense management app, Veryfi aimed to eliminate the tedious manual entry and paperwork that bogged down freelancers and side hustlers. The app enabled users to capture documents using Veryfi Lens and extract data with perfect accuracy using Veryfi OCR. This transforms an often cumbersome data entry tasks with serious human-in-the-loop-produced inaccuracy risks into a fast, accurate, and more secure process. This foundation laid the groundwork for Veryfi’s evolution into a comprehensive financial automation platform. Today, the original Veryfi expense management app is still available for your use. Inside, you can see both Veryfi Lens and Veryfi OCR API in action. We continue to help users manage their expenses efficiently and accurately.
3. Automate Expense Filing
Manually filing expenses can be time-consuming and prone to errors. By using software solutions that white-label Veryfi Lens, you can automate the receipt scanning process. These tools can capture, categorize, and file expenses on your behalf, ensuring that all your financial records are up to date and ready for tax season. Beyond receipts and invoices, Veryfi Lens captures data and Veryfi ∀Docs extracts that data from any type of document so that you have all information extracted and in retrievable digital formats.
4. Deduct Business Expenses
Make sure to take advantage of all available business expense deductions. Common deductions for freelancers and side hustlers include:
- Home office expenses
- Travel expenses
- Supplies and equipment
- Professional services
- Marketing and advertising costs
Using accounting software, you can easily track and categorize these expenses, ensuring you don’t miss any deductions that can lower your taxable income. Find the best accounting software that uses AI-based OCR rather than template-based OCR to make sure every transaction is looked at so you don’t miss out on any deductions.
5. Set Aside Money for Taxes Throughout the Year
Since freelancers and side hustlers don’t have taxes automatically withheld from their income, it’s essential to set aside a portion of your earnings for tax payments. A good rule of thumb is to save around 25-30% of your income for federal and state taxes. Using accounting software can help you estimate your tax liability and keep track of your savings.
6. Stay Informed on Tax Laws
Tax laws and regulations can change frequently, so it’s crucial to stay informed about any updates that may affect your tax filing. Follow reputable tax resources, consult with a tax professional, and use accounting software that provides updates on tax law changes to ensure you’re always compliant. Beyond that, ensure you’re using accounting software that ensures data privacy and regulatory compliance. Veryfi is SOC 2 Type 2 certified, powering AP automation and accounting software in ways that ensure all data stays private and all processes meet compliance.
Filing taxes as a freelancer or side hustler doesn’t have to be a daunting task. By keeping detailed records, using the right accounting software, automating expense filing, and staying informed about tax laws, you can streamline the process and ensure accurate, timely tax filings. Veryfi’s OCR technology powers many of these tools, offering fast, secure, and precise data extraction to help you manage your financial documents efficiently. By leveraging these tips and the power of Veryfi’s OCR API through software like Rydoo, Zoho, and Zeni, you can focus more on growing your freelance or side hustle business and less on the complexities of tax filing. OCR technology truly simplifies the complex tax filing process for freelancers.
Veryfi OCR API powers a dozen more expense management and accounting software. If you produce products that fall into this category and would love to learn more about how Veryfi can boost your platform functionalities, reach out to our Partnerships and Sales Team today!