5 Essential Accounting Tips for Freelancers

5 Essential Accounting Tips for Freelancers
https://search.creativecommons.org/photos/e749753e-c7d5-47de-bfac-6d0868d7b6d6

When it comes to freelancing, you have a lot of things to keep on top; your finances are one of the most important ones. When you’re working freelance, whether that’s for a range of companies or yourself as your own business, you are responsible for everything financial – from everyday banking right up to taxes.

Here are five tips that every freelancer can use to keep on top of their finances.

 

1. Do Your Research

This should be one of the very first things you do when you decide to go freelance, perhaps even beforehand. Removing that security blanket of the steady income that comes with a 9-5 stable job is a big decision.

You’ll need to find out what exactly you’re getting yourself into by going freelance. That means getting to know a bit more about the ins and outs of your industry, what it’s like behind the scenes, and what it takes to be the one running things. You’ll also need to make sure that you’re knowledgeable about what financial arrangements you’ll need to make.

 

2. Plan for Now…

Make sure you know how much (roughly) you’re going to need to get yourself started. Where will it come from? If it’s borrowed, how will you pay it back?  Are you subsidising yourself from your savings, if so, how will you save that backup?

Create a budget to help you keep on top of income, profits and running costs in your first few months/first year so you can not only get yourself going. Make sure you know your figures well, what is profit, and what portion of the income needs to be rerouted into keeping yourself running?

One way to work out an average monthly ‘base wage’ to keep yourself afloat is to look at what you earned last year, then take that figure and divide by 12 and you have your average monthly earnings. Use this as the base for your budget.

 

3.…. and The Future

This means you’ll also want to plan ahead so that but also have a bit of s safety net in case you’re slow to take off or you run into any unexpected costs. One way to do this is to create an emergency fund. In general, you should be saving enough for at least six months – in both personal and business expenses.

This also means always keeping on top of taxes - both in terms of income tax and VAT. As you get paid, keep a running total and plan your taxes accordingly. Taxes are incredibly important, and they are not something you want to get wrong.

 

4. Get Bank Accounts That Work for You

Do you know that old saying ‘You should never mix business with pleasure”? That applies here too. If you’re working freelance, then it would be a good idea to keep your business and personal finances separate, which means: separate bank accounts.

Just make sure when you do that you are using bank accounts that work well for your needs, this will make your life 100x easier. Make sure that when you’re looking for a new account, you take the time to compare accounts. A lot of banks will offer you a specific type of business account that will keep your business finances safe and in check. A savings account will keep your emergency fund secure, and a higher level of current account will sometimes allow you account perks such as different types of insurance included, special customer rewards or special ID security features.

Not only will accounts like these help you keep your money organised, but they might also make your life easier with their bonuses and perks.

 

5.Track Everything and Keep Receipts

This one seems like a no-brainer, but you really do need to track everything when you’re freelancing as you are responsible for all of your own money.

That means if bills don’t look right, clients refuse to pay, or your taxes have an error on them you’re going to need to be able to fight your corner and provide proof something was (or wasn’t) done.

If you’re not keen on managing a whole host of physical files, then try getting acquainted with financial apps and software. Storing receipts, documents, and invoices in a way that makes them easy to record, organise, store and access will save time when it comes to filing your taxes, making claims, or proving your point. You can check here to learn more about Tax Planning and Preparation

There are now even smartphone app scanners you can use to scan receipts and documents to PDF, print, fax, email, and upload to your cloud storage.

Similar Articles

brokerage

In the fast-paced world of international trade, how can businesses ensure smooth and efficient movement of goods across borders? The answer lies in expert facilitation services that specialize in navigating complex regulations and optimizing supply chain processes. 

cash

Managing cash flow is critical for any business's survival and growth. It involves tracking the money coming in and going out of the business to ensure it can meet its financial obligations. 

computer

In the fast-paced world of finance, it can be hard to keep up with the latest advancements in technology. But for financial planners, staying ahead of the curve is crucial. 

Enhancing Efficiency and Customer Experience through Core Banking Systems

In the ever-evolving banking landscape, core banking systems enable financial institutions to provide efficient operations and exceptional customer experience. These systems serve as the backbone of banking operations, encompassing a range of software applications that manage core functions such as account management, transaction processing, and customer data management

business

Cash flow forecasts are only predictions, so some variations between forecasts and financial reality are normal. But what do you do when there is a discrepancy that significantly impacts your business operations?

Smart money management

Master your finances with these 7 smart money management techniques. Take control of your financial future today!

PayPal

Paypal also provides money transfers between countries. You can send money to more than 200 countries through Paypal. It’s also possible to make purchases by using a credit card via Paypal. While doing this, you don’t need a physical card. Like Wise, Paypal also offers safe and fast money transfers.

Key Reasons for Using eWallets in the Modern Era

Mobile money is essentially an electronic wallet service, available in many countries. This service allows users to send and receive money from their mobile phones. As per a report from the World Bank, more than 1.7 billion adults do not have a bank account

Ways to Exchange Money Without Paying Exorbitant Fees

As a result of the pandemic's pent-up consumer demand, Americans are preparing to travel once more. If you're planning a trip to another nation for your next holiday, you'll want to know how to receive foreign currency without paying extra fees.