What is non-invoice income? And how do you track it?
Small business owners are known for their enterprising abilities to earn income in diverse and creative ways. This means in addition to invoicing for work, there might be non-invoice income too.
Lots of irons in the fire keep life interesting and prosperous—but they can also make tax time a headache.
Most service-based businesses send invoices to collect their payments, so when tax time rolls around it’s simple to run a report and find out how much income you brought in. But what if you have other sources of income, like cash payments or the sale of products? What is considered another source of income? Also, how do you track it?
We have all the answers to your burning non-invoiced income questions, including a helpful system to help you organize it all.
What is ‘Other’ Non-Invoice Income?
Any money you make through your business is considered income—even if you didn’t send an invoice to receive it. Here are some examples of non-invoiced income:
- Rent from a tenant
- Physical products you sell
- Interest accumulated in a business bank account
- Affiliate income
- Cash jobs
- The value of any goods or services received as payment instead of cash
Intrigued? Diversifying your income is a great way to future-proof your business. Instead of relying on a single service and a handful of clients, having income from a number of different sources can help you secure success in the long term. You’ve just got to make sure you account for it all.
Why Is It Important to Track Non-Invoice Income in Your Accounting Software?
A cash job here, an affiliate check there and the occasional product in lieu of payment may not add up to a lot, but when it comes to doing your taxes, every cent counts. The same goes for regular rent checks or your side hustle on Etsy. As a small business owner, it’s incumbent upon you to track and report all of your income.
If you don’t track it, your records will be inaccurate and tax time will be … unpleasant. It’s important to have a system to manage your income, no matter where it comes from.
Another good reason to track non-invoiced income is to have a direct line of sight to where your income is coming from. Sometimes our impression of how much we’re making differs from reality. It’s helpful to be able to calculate how much that side gig contributes to your overall income. Maybe it’s not worth the trouble. Or maybe it’s more lucrative than you ever imagined.
How Do You Track Other Income in FreshBooks?
Whether you’re already a FreshBooks user or not, it’s simple and intuitive to add non-invoiced income.
- Start by logging in and clicking on Invoices
- Click on the Other Income sub-section that appears
- Next, click on the New Income Entry button
- Choose a Source (Hint: It helps to be as specific as possible so you can have a firm grasp on where your income is coming from)
- Select a Category for the income
- Finally, specify the Amount, Currency and Date
Just like with invoiced income, you’ll have the option to Add Included Taxes and specify Payment Details.
FreshBooks not only keeps track of all your entries, but also color codes them for easy skimming. To access your list, click the More tab on the blue stripe from anywhere in your account then select Other Income. You’ll be brought to a page where you can search, review and even add new entries.
Good to know: An Other Income breakdown is available on your Dashboard so you can see at a glance where your money is coming from, and get insights that will help you direct your business anywhere you want it to be. Visit our FAQs here.
When it comes to succeeding with your small business, there are no rules. You may have started out as a service provider, but want to expand into goods. Or maybe you want to diversify into a bunch of ways to earn an income. At FreshBooks, we salute your ingenuity and are proud to help you account for it all, quickly and easily.
This post was updated in December 2019.