QuickBooks Free is a no-cost bookkeeping plan designed for one-person businesses with relatively light bookkeeping activity. It’s not a tax filing tool, but it helps you manage the records you need to file your tax return every year, including income, expenses, receipts, mileage, and contractor payments.

That assistance can save you from hours of work combing through a year’s worth of bank statements when it’s time to create your profit and loss report. Here’s how QuickBooks Free can help you prepare for tax season, and when it may be worth upgrading to a paid plan.

Your transactions get sorted as they come in

QuickBooks Free lets you connect one bank account and pulls in your transactions from that account automatically. It then categorizes each one and can even separate business and personal expenses, so your books stay accurate without much manual entry.

This simple process can be a huge boon at tax time because you can only deduct eligible expenses related to your business. If you don’t keep up with your expenses all year, it can be extremely difficult to go back and figure out which expenses are eligible and which aren’t. 

In contrast, reviewing expense categories as they come in through QuickBooks may only take a few minutes a week.

Your profit and loss report is ready when you need it

In addition to balance sheets and account summaries, QuickBooks Free includes a profit and loss report, which is a key document during tax season. The profit and loss report shows your total income, your total expenses by category, and what’s left over.

If you’re a sole proprietor or a single-member LLC, you’ll use this report to fill out your Schedule C, and your net profit is what determines your self-employment tax. Checking on the report throughout the year is also a good way to estimate your quarterly tax payments, so you’re not caught off guard by a big bill in April, or worse, assessed penalties for underpayment. 

You can log receipts and mileage as they happen

QuickBooks Free lets you capture up to two business receipts per month, which you can use to back up your claim for a deductible expense. Doing this will make it easier to keep track of your records, especially compared to keeping them in a shoebox or a messy email inbox.

If you drive for your business, you’ll also need to keep a log of your trips to claim the mileage deduction. With QuickBooks Free, you can log up to five trips every month, making it easier to record your mileage on the go rather than piecing things together based on your calendar at the end of the year.

You can manage one contractor

If you’ve hired a freelancer or part-time helper, you can use QuickBooks Free to manage not only your payments but also tax compliance. That includes inviting them to fill out their W-9, creating and filing 1099s with the IRS, and providing 1099 access to your contractor for their own tax filing needs.

Without this help, you’ll need to manage tax compliance on your own. If you miss a deadline or make a mistake, you could face penalties. 

Invoices provide a record of your income

QuickBooks Free allows you to send up to two custom invoices and one estimate every month. Each invoice provides documentation for what you’ve billed a client, and QuickBooks can then match a payment to your linked bank account to show that it’s been paid.

This record can come in handy when you’re reconciling your income with 1099 forms your clients send you during tax season. If a form doesn’t match what you’ve received, you have the invoices to show the difference.

Where QuickBooks Free may fall short at tax time

QuickBooks Free offers some basic features that can make your tax filing easier to manage. But the no-cost plan doesn’t offer accountant access, so if you have someone else prepare your taxes, you’ll need to make sure to provide all the relevant information they need on your own.

The free plan also sets limits for bank account connections, invoices, and mileage logs, which can become a problem as your business grows or if you use multiple spending accounts. Finally, you’ll need to manually calculate all sales tax you collect.

In contrast, QuickBooks paid plans offer the following:

• Invite two accountants to access your books (QuickBooks Advanced allows for three). 
• Unlimited invoices.
• Unlimited mileage logs, tracked automatically with the QuickBooks mobile app.
• Automatic sales tax calculation.
• Manage tax compliance and payments for unlimited contractors. 
• Maximize your tax deductions. 

On top of that, the Essentials plan and above can help you estimate quarterly payments with the Business Tax AI feature. And with a Plus or Advanced plan, you can catch sales tax discrepancies before you file. 

As of this writing, QuickBooks paid plans cost between $38 and $340 per month, with a 50% discount offer for the first three months. They also each come with a 30-day free trial.

The takeaway

QuickBooks Free won’t file your taxes for you, but it can help keep your income, expenses, receipts, mileage, and contractor payments organized in one place. For a business with a single operator and relatively light bookkeeping, it may be all you need to file your return every year.

However, if you want an accountant working directly in your books or your invoice or mileage activity exceeds the free plan’s limits, it’s worth comparing the paid QuickBooks Online plans to determine whether those can offer what you need.

Frequently asked questions

Can you file your taxes with QuickBooks Free?

No, but if you want to file your tax return within QuickBooks, you can use QuickBooks Live Tax for an extra fee, which varies by entity type. The tool pulls data directly from your QuickBooks Online account for a seamless experience, and it also adds unlimited expert support.

What QuickBooks reports do you need for taxes?

You’ll typically need your profit and loss statement and, depending on the situation, your balance sheet. Your tax preparer may also ask for receipts, mileage logs, and records of what you paid contractors.

Is QuickBooks Free actually free?

Yes. QuickBooks Free is a no-cost plan, with no credit card required to sign up. For paid plans, QuickBooks offers a 30-day free trial, but this is separate from the base free tier of QuickBooks Online.