Learn about self-employment ledgers, including what they are, why they are helpful, examples, how to use them, and more!
Unless you’re an accountant, keeping track of your business finances is one of the most challenging parts of being self-employed. Tracking your income and expenses can help ensure you’re generating a profit, and this information is useful for filing taxes accurately, too.
But how do you keep track of your business expenses, especially if you haven’t hired an accountant? One of the best ways to track your income and expenses is by using a self-employment ledger.
What’s a self-employment ledger?
A self-employment ledger is a place where you keep track of all of your business income and business expenses. It doesn’t have to be anything fancy, and it doesn’t necessarily require a lot of work, either.
Whether you get paid through cash, an app, a check, or direct deposit into your account, you can include it in your income ledger. And the same goes for expenses – every business expense can be kept in this ledger as well.
Your self-employment ledger could be electronic, such as through a spreadsheet or accounting software. It could also be on physical paper if you’re more comfortable using that method. Whichever method you use, your most important task is to make sure all of your business income and expenses are included in your ledger.
Why is a self-employment ledger a great way to track your income and expenses?
Keeping track of your income and expenses when you’re self-employed is incredibly important, and a self-employment ledger can be a helpful tool for this. The ledger is simple, and you can see your income and expenses at a glance. This bookkeeping method also can potentially help you file taxes, apply for loans, and check on the financial health of your business.
Part of running your own business is making sure that your bookkeeping is accurate. You may choose to do this yourself, or you may choose to hire a service or an accountant to do it for you. But you don’t have to be an accountant to stay on top of your finances!
indi’s mobile banking tools make it even easier for self-employed individuals to track their income. You can categorize every transaction as business or personal inside of the app, helping you keep your work and personal payments separate. Another feature lets you capture your receipts in your indi app and keeps all your records organized and in one place.
At the end of the year, indi can even generate a Schedule C based on your business transactions, simplifying your tax filing process. This helps ensure you’ve accounted for all your income, and makes sure you’re not missing any deductions for business expenses. And if you’ve used indi’s Autosave for Taxes feature, you’ll already have money set aside for taxes you may owe.
Self-employment ledger examples
There are many types of self-employment income ledgers. As your business grows, you may want to adjust the type of ledger you use.
Some people prefer using a paper method, such as a simple budget planner notebook or an expense log book. These methods can work well, especially if you don’t mind manually adding and subtracting to calculate the total. This method can also work well if you don’t have a variety of income sources or make a lot of purchases.
Another paper method involves printing off templates and completing them by hand. You could keep this type of self-employment ledger in a binder or notebook, adding fresh pages when you need to.
Digital self-employment ledgers are a popular option and easy to use on-the-go. This could be as simple as a spreadsheet you keep on your computer or smartphone, or as complicated as using accounting software for all your business transactions.
Whichever method you choose, it should be one that you can use easily and remember to keep up to date. indi’s digital banking tools can help you stay organized, too, by categorizing expenses and saving your receipts. So even if you get behind, you can more easily get your self-employment ledger caught up with indi’s tools to categorize your income and expenses.
How to use a manual self-employment ledger
If you decide to use the manual method for your ledger, there are several methods to choose from.
You can use a printable self-employment ledger template and print out copies to fill out manually. If you prefer to keep your work on your computer, you could also find one with fillable fields, saving each page on your computer or printing them out once they are complete. Keep these income ledger forms together in a folder on your computer or in a binder after you print them.
You can also easily create your own income ledger template by using a spreadsheet. Here are some possible headers for the columns:
- Invoice number
- Name of Person or Company
- Amount of Income
- Amount of Expense
- Service/Product or Type of Expense
Leave a row at the bottom so you have room to total the income and expenses. Then, either print your sheet to complete with a pen, or leave it on your computer and update it as needed.
If you’re using indi, snap a picture of your receipt and save it with indi’s receipt capture tool, too, so you don’t have to keep a receipt file.
Whichever method you use, just make sure your income ledger template is safely stored, so your personal information is protected.
Is a ledger proof of income?
You may need to provide proof of income when you apply for a loan, a credit card, or even to get health insurance. If you have self-employment income, you can use a ledger to help support your proof of income. Banks or other lenders may require additional information, such as tax returns or bank statements, but your self-employment ledger also could provide proof of your income.
It’s even more important to stay up to date on your personal finances when you’re self-employed. Keeping an accurate ledger book can potentially make it easier to apply for loans and provide information for filing taxes.
Being self-employed can mean wearing a variety of hats. You do your own marketing, answer your own phone, and act like your own boss to keep your business running successfully. It also means that you’re also in charge of all your finances! Keeping an accurate, up-to-date self-employment ledger is one of the best ways you can stay on top of your finances.
Simplify your financial life by using indi’s digital banking tools specially created for independent workers. Categorize income and expenses, keep track of receipts, and use the autosave for taxes feature so you can spend more time working and less time worrying about finances. Apply for your indi account today to see how indi can help you meet your goals!
This article is not intended to provide financial, tax or legal advice and the information provided may not address your individual circumstances.