How do subcontractors track 1099 income and expenses?
Start with a separate business bank account. Mixing personal and business transactions creates confusion and makes tracking nearly impossible. Every dollar you earn as a subcontractor should deposit into the business account, and every business expense should come out of it.
Track income by client. When you receive payment from a general contractor or company you work for, record who paid you, the amount, and what project it was for. At year end, you’ll receive 1099-NEC forms from clients who paid you $600 or more. Your records should match these forms. If they don’t, you need to figure out why before filing taxes.
Categorize expenses as they happen, not at year end. Common categories for subcontractors include vehicle expenses, tools and equipment, materials, insurance, licensing fees, phone and internet, and job site supplies. When you buy something for work, immediately note what category it falls under. Waiting until December to sort through a year of transactions means you’ll forget what half of them were for.
Capture receipts digitally. Use your phone to photograph receipts the moment you get them. Apps like Dext or HubDoc pull receipt data directly into accounting software. Paper receipts fade and get lost. Digital copies stay searchable and organized.
Use accounting software designed for small businesses. QuickBooks Online handles 1099 income tracking well and connects to your bank account for automatic transaction imports. You still need to review and categorize transactions, but the data entry happens automatically.
Reconcile your accounts monthly. Compare your bank statement to your accounting records and make sure everything matches. This catches errors early and forces you to deal with transactions you might have skipped. Monthly bookkeeping discipline is what separates subcontractors who know their numbers from those who scramble every April.
Set aside money for quarterly estimated taxes. As a 1099 worker, no one withholds taxes for you. You owe self-employment tax on top of income tax, which catches many subcontractors off guard. A general rule is to set aside 25-30% of your net income for taxes.
The goal is knowing exactly what you earned and spent throughout the year. When your records are accurate, tax prep is straightforward and you can identify deductions you might otherwise miss. Los Angeles bookkeeping services can help if you’d rather hand off the tracking entirely, but the system needs to exist whether you manage it yourself or not.
LA's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a clear price for the work.
More Questions
Can I deduct my home office as a real estate agent?
Yes, most real estate agents can deduct their home office. Even though you meet clients at properties rather than your home, you qualify through the administrative activities exception if you use a dedicated space for paperwork, marketing, and transaction management.
Read answerWhat should I look for when hiring a bookkeeper?
Look for industry experience, clear communication, and genuine interest in understanding your business. Technical skills matter, but so does whether they ask the right questions and explain things in ways you understand.
Read answerCan I import my existing data into a new QuickBooks account?
Yes, QuickBooks allows data imports from various sources. You can bring in customer lists, vendor lists, chart of accounts, and historical transactions. The process and limitations depend on where your data is coming from.
Read answerHow do I set up QuickBooks for my real estate business?
Start with a chart of accounts designed for property income and expenses, then set up tracking by property using classes or locations. Handle security deposits as liabilities, not income, and separate capital improvements from repairs.
Read answerHow often should I reconcile my law firm's IOLTA account?
At minimum, monthly. The California State Bar requires a three-way reconciliation each month. High-volume firms handling multiple client matters should reconcile weekly or even daily to catch errors before they compound.
Read answerHow do chiropractors handle bookkeeping for their practice?
Chiropractic bookkeeping involves tracking multiple revenue streams including insurance reimbursements, cash payments, and product sales. Most practices integrate their practice management software with QuickBooks and either handle bookkeeping themselves or outsource to someone familiar with healthcare billing.
Read answer