Earlier today, one of our fine customers tweeted at @harvest to say that Harvest’s printer-friendly reports have helped to make the process of calculating estimated taxes a breeze.  Since making quarterly estimated payments to the state and federal governments are a requirement for all freelancers and businesses based in the U.S., we followed up with her to get more information.  Jennifer, a freelance front-end web developer based in Illinois, was kind enough to follow up and share a detailed explanation of how Harvest simplifies her process for making estimated tax payments on a quarterly basis.

Taxes can’t be described as fun, but I actually don’t mind the process of doing my estimated taxes each quarter. I made it as easy as possible on myself by doing a few things at the start of the year. First, I grabbed the 2009 1040-ES form for the IRS. Before I printed it out, I filled in the information that wouldn’t change- my name, social security number, and address- on each of the four forms. I printed that sucker as well as four envelopes with the IRS address (The address for your region is on page 6 of the 1040-ES PDF) and my return address. I’m based in Illinois, so I did the same thing for the IL-1040-ES state form (use google to find your state’s 1040-ES form). I also marked the four estimated tax due dates in my calendar to remind myself a week before-hand that they were fast approaching!

The due dates for estimated taxes as well as the timeframe for each are as follows:

• April 15, 2009 (payments received from January 1 – March 31, 2009)
• June 15, 2009 (payments received from April 1 – May 31, 2009)
• September 15, 2009 (payments received from June 1 – August 31, 2009)
• January 15, 2010 (payments received from September 1 – December 31, 2009)

Putting in this extra effort at the beginning made me feel super organized about the whole process. It allows me to grab two forms and two envelopes and start crunching some numbers. That’s where Harvest comes in!

I do my estimated taxes by payments received (instead of hours invoiced, which is another option), so each quarter I create a Payment Report by navigating to Invoices > Report > Create New Report. I check off Payments Received Report, change the timeframe to custom so that I can select the appropriate quarter dates, and leave Clients set to All.

The first time I printed a Payment Report, I was pleasantly surprised at how clean and simple it looked. It’s perfect to file for my records. I do the math right on that print out so that everything is together. I multiply the total payment by my state tax percentage (3%) and cut a check to the Illinois Department of Revenue. On the check, I make sure to note the form name (IL-1040-ES) and my social security number. I do the same thing for the IRS. The percentage for federal tax is a little bit trickier to figure out. It’s based on your income as well as if you’re filing as a single, head of household, or jointly with your spouse. There’s a handy worksheet on page 5 of the 1040-ES form to help figure out the correct percentage. I’m lucky enough to have an accountant in the family, so I also asked his advice on the right percentage for me. I err on the side of caution by overpaying now and possibly getting a tax return later rather than underpaying now and having to pay extra later.

Finally, I slap a stamp on those pre-printed envelopes and make a photocopy of the envelope, the estimated tax payment voucher form, and my personal check for both the state and federal taxes. I keep those on file with my Harvest Payment Report. And Bam! I’m ready to get back to making money!

A big thanks to Jennifer for taking the time to share her tip with the rest of the Harvest community.  We love hearing stories like this, so if you’d like to share a small business tip involving your use of Harvest, let us know!

Secure Connection (SSL) Now Available on All Plans

We are always happy to deliver more value to our customers without raising prices whenever we can. Today, we have an opportunity to do just that. For our Basic and Solo customers, we’ve activated an option which allows you to use SSL for your connection to Harvest. This means the connection between you and Harvest (whether you’re using a browser, desktop widget, or iPhone) will be encrypted by a secure, industry-standard SSL certificate. In other words, with SSL, everything from time entries to your invoices are encrypted and transmitted securely between our service and you. This is the same technology used by online banks and e-commerce sites.  We understand the sensitive nature of your data and we hope this extra security measure will further put your mind at ease as you use Harvest for your time tracking and invoicing needs. To activate SSL for your account, simply navigate to Manage > Account Settings > Preferences and update the “Use SSL” attribute. (Note: Business plans already use SSL connection for all communications)

Unlimited Clients and Projects for Solo Plan

Harvest Solo plans (which are actually expandable up to 3 users) also get a new update. Users of this plan can now track unlimited number of clients and projects within Harvest. Whether tracking time on an handful of active projects or keeping a handy and complete list of all your client contacts in Harvest, our new Harvest Solo plan is designed to make your life simpler. (Note: Business and Basic plans already enjoy unlimited clients and projects)

We hope you enjoy these plan updates and stay tuned for more great stuff coming later this month!

We just released a small but important update for Harvest’s Invoice export.  On Invoices > Report you can export the report to Excel.  We’ve added three extra columns in the export: subtotal, tax, and tax 2.  So you can now download your data and run report on your earnings versus taxes.

A few weeks ago, we got a glimpse of beautifully executed Harvest add-on called Scythe.  We’re excited to tell you that this FREE add-on is now available for download.  The simple application allows users to track their earnings via an interface which appears on the menu bar of Mac OS X.

Let Harvest do your time tracking while you track earnings right on your desktop with Scythe.

Learn more and download Scythe

Many thanks to Doug of Falesafe Consulting for coming up with this great Harvest add-on!

According to one survey, nearly 20 billion paper invoices are exchanged between businesses each year–that’s a lot of paper!  Given that’s it’s Earth Day, the time is now for a start-up like billFLO.  The product focuses on eliminating paper invoices by creating a new format for invoices: machine-readable invoices.

billFLO has integrated with Harvest’s invoicing feature to facilitate the sending and receiving of machine-readable invoices.  It’s the first step in moving towards a more efficient, machine-readable standard, and we’re proud to be a part of this future.

Starting this Friday, you will be able to integrate PayPal with your Harvest account. The new feature will make billing in Harvest faster, simpler and more organized; your clients will love the new simplicity and ease of paying your invoices; and our planet will appreciate the reduction on paper waste!

To activate PayPal integration, go to Invoices > Configure. Put in your PayPal email address, and you also can change the PayPal link’s language on the same page.

Once that’s set up, you’ll notice that when you send an invoice via Harvest, there’s an extra option to “include PayPal payment link“. Check that option, and your client will receive a unique URL to the invoice in their email (which is getting an upgrade this Friday, see our previous blog post), which lets them view and pay the invoice online:

On the invoice, your client can click on the button to pay for it via PayPal. Once they pay, Harvest will automatically record the payment, add it to the invoice’s Activity Log, and update the invoice’s status.

Harvest’s integration with PayPal will make your billing faster and more organized, and it will save you and your clients on paper and postage stamps with a completely paperless billing cycle for your business. Better for your business and better for our planet!

What are some other ways you wish Harvest can make your business more organized and more environmentally friendly? Please let us know by leaving a comment below or write us via our support form.

This Friday we’re launching a new feature that will let you integrate PayPal with your Harvest account.  We will publish a post tomorrow to give you more details on that – but today, we’d like to first show you a small, but significant upgrade to the format of invoice emails sent to your clients.

This is what the new invoice email will look like:

We’re moving away from plain text email to HTML email, which allows for linking text and more control with formatting.  The link “Click here to view and pay invoice online” will only show up if you choose to integrate with PayPal (and you will have the option to include it or not on each invoice you send).  We chose to put in as little formatting as possible to keep the email small and light (faster delivering and rendering), and at the same time add some visual design to the email, so that it’s easier for your clients to scan.

We hope you find this small upgrade useful!

If you are doing business in Canada and the EU, you may be required to collect two sets of taxes on many of your invoices. While this may seem like a complicated procedure, Harvest invoices make these calculations very simple. Harvest is able to calculate both simple and compound taxes in dual tax fields.

Invoicing with Simple Tax Calculation

In a Simple Tax situation, both federal and provincial taxes are applied equally to the principal invoice total. For example, on the invoice below, the pre-tax total is $750, and the 5% GST and 3% PST are applied equally to the subtotal, for a total amount of $810.00. This type of dual taxation is supported in Harvest invoices by going to Invoices > Configure and selecting ‘Simple Tax’.  If you are doing business in Canada outside of Quebec and PEI, you should use this setting.

Simple Tax: Tax 2 is calculated as a percentage of the subtotal.

Invoicing with Compound Tax Calculation

In a Compound Tax situation, the total cost of a product or service is taxed federally, then the total of that amount, including the federal tax, is taxed provincially a second time. For example, in the case below the invoice  $750 is taxed at 5% GST, for a subtotal of $787.50. Then, a second compound tax of 3% PST on the subtotal, in the amount of $23.63, is added to the total bill, for a final amount due of $811.13.  This type of dual taxation is supported in Harvest invoices by going to Invoices > Configure and selecting ‘Compound Tax’. If you are doing business in Canada, in Quebec or PEI, you should select this tax setting.

Compound Tax: Tax 2 is calculated as a percentage of the subtotal + tax 1.

Important Definitions

• Compound Tax – Also known as a stacked tax. Applying a second, provincial tax, on the total of the invoice including the Federal tax. In Canada, both Quebec and Prince Edward Island require a second, compound tax to be charged on goods and services.

• GST – Goods and Services Tax, charged Federally on good and services in Canada and the EU.

• PST – Provincial Sales Tax, charged locally on goods and services and can be applied as either a Simple or Compound tax depending on the geographic location.

We’ve added a new feature to Harvest, the ability to write off an invoice with an outstanding balance. On an open invoice, under “More Actions”, you can select the option “Write off Invoice”. A notes field will pop-up, allowing you to make a record of why this amount of money is being written-off. This option will cancel the remaining balance of the invoice, and the invoice will appear as “Written-off”.

You can also run a report to see which invoices you have written-off by going to Invoices > Report, and checking the box labeled “Written-off”. This feature will simplify your bookkeeping and remove outstanding debts from your balance sheet. In many cases, the debts incurred from written-off invoices can be treated as expenses and deducted from your taxes, so ask your accountant if this applies to your business.

Many of the new features and improvements we add to Harvest come directly from you, the Harvest users. What other improvements can we add to Harvest invoicing to help simplify your billing? Please let us know via the support form.

I recently made my yearly call to the accountant. After some small talk and catching up, he apologized, but informed me that my appointment was going to cost a bit more than it did last year. He cited the general state of the economy, the fact that his rent has gone up and that even his printer paper was more expensive now. In all honesty, I didn’t really flinch. He’s always done a great job, and everyone is feeling the economic pinch in some way. I’m still happy to be his client.

This prompted me to think that despite the economic crisis, some service businesses still need to consider raising their hourly rates. I wondered: How is it possible to let clients know that your rates are going up, while making sure they remain satisfied clients? I decided to round up some strategies and advice to make this task a little bit easier for business owners and their clients.

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