Ryan VaughnCOO of Incite Tax & Accounting. Ask me anything about your taxes.

Tracking Business Income | Incite Tax

20 Mar 2025 · 1 min

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In this video, Ryan Vaughn explains why independent contractors must actively track their business income and expenses. He notes that not all earnings are captured on 1099‑NEC or 1099‑MISC forms, and during an IRS audit the agency will compare reported income to actual bank deposits. To avoid discrepancies, contractors should reconcile their income with deposits and maintain detailed records of deductions and expenses. For low‑volume contractors, a simple Excel spreadsheet can suffice, while those with a full‑time gig and higher transaction volume are advised to use QuickBooks Online for more robust tracking.

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You need to track your business income. As an independent contractor, not all of your income may be reported to you on some sort of form. Again, that's likely gonna be a 1099-NEC or a 1099-MISC, but it's possible you received income that's not reported there. If you're audited, the IRS is going to look at your bank accounts. They're gonna look at your deposits. So you're gonna wanna make sure that your business income matches the business deposits. So you track that, and then you track your deductions, expenses, synonymous words. How do you do that? You're not— it's not a super active independent contractor activity. We have clients who do that just with an Excel file. If it's your full-time gig and there's a decent amount of transactions, QuickBooks Online is a great option.