An independent contractor expenses spreadsheet is a tool you can use to track and organize your expenses. It helps you keep a record of all the dollars you have spent to run your business, including the fees for your equipment, supplies, transportation, and other miscellaneous costs.
In this article, we’ll provide a free 1099 expenses template so you can use it for your Schedule C and tax filing. We will also discuss its uses, benefits, and common tax deductions, ensuring you don’t miss any important details as an independent contractor.
Get the template here for free: Independent Contractor Expenses Spreadsheet
Table of Contents
Exploring Our Free Independent Contractor Expenses Spreadsheet
Our template is simple, containing only two tabs that you need to use to track your business expenditures. After opening your copy, you’ll see the Summary tab, which includes the total amount per category and the possible tax deductions you can take.
There’s also the Expenses tab where you can enter the figures of all your payments and purchases. Let’s explore these in more detail below.
1. Expenses Summary
This tab features five columns, presenting a quick overview of your costs as an independent contractor. There’s no need for you to edit this section, as the spreadsheet formulas will automatically do the calculations for you.
- Line: The numbers under this column correspond to the various categories of Schedule C. Its purpose is to let you navigate your costs more quickly to ensure that you’re putting the right amount in the correct category.
- Schedule C Category: The categories in Schedule C determine what you can and cannot write off from your taxes. This column organizes your expenses more clearly, letting you know where to save money.
- Total Amount: This column automatically gets updated as you list your expenditure numbers under the Expenses tab. Take note that it presents the sum for each category.
- % Business Use: Some expenses you make may be partially for your business operations, like your auto costs. You can modify this column by inputting the equivalent percentage you used solely for business purposes. If you leave it blank, it defaults the value to 100%.
- Home Office Deduction: Be sure to read up on your home office deduction, too. The IRS has a simplified option for calculating this.
- Tax Deductible Amount: The numbers here are automatically calculated by multiplying your gross amount per category and business use percentage.
Another handy feature you’ll see once you scroll down the template is the Total Tax Deductible Amount. This is a sum of all the tax-deductible amounts of the categories listed.
2. Detailed Expenses Record
To produce a summary of your expenses, you need to input the specifics of your costs into the Schedule C Category column. Here, you must select an item from the dropdown menu of categories. Let’s take a look in more detail at how to populate your numbers:
- Date: Keeping track of your expenditures lets you trace your expenses to the penny. Simply enter the date using the following format: MM/DD/YYYY. Note that this column only accepts valid dates and will reject other kinds of input and date formats.
- Schedule C Category: Under this column, you’ll find a dropdown menu of items that fall into a particular category in Schedule C. Simply click on an item from the menu to confirm your choice.
- Merchant: Enter the merchant name where you bought a product or paid for a professional service.
- Expense: Write a detailed description of your costs. For example, you can say it’s a payment for your employee or their work benefits.
- Amount: Update the amount per expense, ensuring that it matches your receipts and invoices. Also, confirm that you entered the correct amount, as the numbers under this column are summed up according to the category in the Summary tab.
Saving Your 1099 Expenses Template
Once you’re done for the year, you can also save your document as a PDF. Just go to the file menu and choose “download”. Then, choose PDF.
You can save this in your Google Drive for years, as required for any audits.
Benefits of Using a Tax Sheet Template
1. Reliable financial record
While being your own boss seems great, one caveat you might not like is that you have to cover your own working costs.
You’re essentially running a business, highlighting the importance of regular and accurate cost tracking to ensure you pay your taxes correctly and have a good opportunity for further investment. Your expenses sheet template is a record book of all your business costs, allowing for reliable tax filing.
2. Saving money
Another aspect of creating or using a spreadsheet for cost tracking is finding the points where you might be overspending. For example, you may be spending too much money on car fuel. With accurate records, you can readjust your driving habits or find another solution to minimize fuel consumption.
On top of that, you can take advantage of many tax write-offs with your independent contractor status. We’ll discuss these common tax deductions in the next section, so be sure to keep reading!
3. Building a good credit score
Most people think that due to the relatively unstable income of freelancers, it’s hard to build a good credit score. But a solid record of your expenses as an independent contractor on your spreadsheet and your transaction receipts is enough proof to show that you are an excellent payor.
Common Independent Contractor Tax Deductions You Shouldn’t Pass Up
There are a lot of business expenses that you can write off from your net taxable income. Here’s a detailed list of the common ones you don’t want to miss.
- Rent and mortgage: Leasing commercial spaces or a unit for work can be deducted from your rental costs. Additionally, if you work from home, you can deduct your home mortgage interest or qualify for bill reductions, such as electricity or water.
- Equipment: Machinery costs and tools may be written off if you provide evidence they are used for business purposes. You can also deduct your business-related phone and internet bills.
- Travels and meals: Business trips or meals with clients contributing to your enterprise can be claimed as a business expense. However, this does not include any personal trips or dine-outs.
- Self-employment tax: Social security tax payments and government health insurance (Medicare) can also be deductibles.
- Advertising: Marketing and advertising costs can also be counted as deductibles, providing they are reasonable costs.
- Vehicle expenses: Vehicle costs related to your business can be written off, but personal trips are not included. Therefore, if you also use the vehicle for personal trips, you should also record your business-use percentage to make an accurate deduction.
- Business insurance: Insurance premiums that keep your business in good condition can be written off too.
- Upskill costs: Paid courses, training sessions, and the like can be deducted because the money is used to pay for you to improve your skills, which counts as a business investment.
The deductibles mentioned above give you a good idea of how much you can write off for your business. However, you can only enjoy these benefits if you accurately track your annual expenses.
I’ve Filled Out This Template. What’s Next?
All that you have left to do is begin filing your tax returns. Aside from your expenditure record, you must also compile your receipts, which serve as proof of your declared expenses. Luckily, you can do this by keeping a digital copy (an image, for example) of your receipts inside an online drive.
Alternatively, you can also hand the template to your accounting professional to further check potential money-saving aspects.
Tax Spreadsheet for Self-Employed
Tracking your expenses and potential tax deductions is one of the best practices you can do as a self-employed individual. By the term “self-employed,” you can either be a sole proprietor, independent contractor, freelancer, or another professional.
As an independent contractor, it is helpful to use an independent contractor spreadsheet, especially when filing your Form 1099, because it involves filling out your Schedule C (1040). The Schedule C form is your business’s profit and loss form, highlighting your proceeds and losses.
Are LLCs (Limited Liability Companies) also required to file a Schedule C? By default, you’re required to do so if the only member of your LLC is yourself. This is because it’s basically considered a sole proprietorship in terms of federal income taxes.
Using one allows for easy expense categorization while reporting the gross amount spent on each category. Therefore, having a record of your expenses is crucial when filing your taxes. In addition, it’s also a great way to revisit your spending history to see where you can lower your business costs.
What Should a Good Taxes Spreadsheet Template Have?
Whether you’re planning to make a spreadsheet or find a template on the web, here are some nice-to-have specifics you want to look out for.
- Expense details column
- Schedule C category column
- Expense amount column
- Separate fields for date of expense, merchant name, and other details
Having these fields well-organized will allow you to record your costs more accurately and in greater detail, ensuring you’re not adding up the wrong values. You may also want to include a column for your digital receipts, allowing quick referencing.
Our self-employed expenses spreadsheet template features these characteristics alongside built-in formulas that will make the work easier for you. So, don’t forget to save a copy of our template for stress-free expense tracking.
Get the template here for free: Independent Contractor Expenses Spreadsheet
Frequently Asked Questions
1. How Do I Report Independent Contractor Expenses?
You can report your expenses as an independent contractor by completing the IRS‘s Schedule C form. The form details your gains or losses throughout the year while reporting your total costs under Part II, the Expenses section. After filling it out, attach it with other accompanying forms like Schedule 1, Schedule SE, and Form 1099 when filing your taxes.
2. How Do Independent Contractors Keep Track of Income and Expenses?
It varies depending on how you want to do it, but one of the best ways to keep track of your income and expenses is through spreadsheets. Just record the money that goes in and out of your financial account and tally it by the end of the year. If you don’t know where to start, you can simply download our free expense sheet for taxes or make one from scratch.
Final Thoughts
Tracking your business expenses falls on you as a self-employed individual. While it might seem daunting to manage your costs, it isn’t something you should stress about because it is perfectly manageable.
To have an easier time tracking your costs, filing your taxes, and living a stress-free life, all you need to do is download Spreadsheet Point’s free independent contractor expenses spreadsheet template.
Get the template here for free: Independent Contractor Expenses Spreadsheet
References
- Internal Revenue Service. What kind of records should I keep [Internet]. IRS; [cited 2024 Jan 9]. Available from: https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep
- Internal Revenue Service. Home Office Deduction [Internet]. IRS; [cited 2024 Jan 9]. Available from: https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
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