As a freelancer, part of your job is to keep on top of your money and your financial plan. Managing finances may not be part of your job description but it’s obviously an important part of leading a successful freelance career. How do you manage your income? Are you leaving it up to a third party or an accountant or perhaps you’re taking each week as it comes? We’ve compiled a list of best practices for you to better manage your income and keep you money in order.
Create a Budget
Make a list of everything you need each month, both business and personal and keep track of what you’re spending. Mint has a great free resource for budgeting and they even send alerts to let you know how you’re doing. Make sure you pay yourself and budget for your own personal allowance. If you have a few months where you come in below your budget, you may need to rethink your freelance strategy or take on more work.
Manage Expenses
Here’s where the bookkeeping comes in. Familiarize yourself with a program to help you track expenses with ease. We recommend QuickBooks or a similar software program — when it comes to tax season, it makes everything that much quicker. Apps such as DocScanner are a wonderful little tool to upload documents from your phone and help you to de-clutter your office space. Ana Rubio, Artisan’s Financial Controller states, “Tracking income and expenses can also be easily done on a spreadsheet listed by each week so you know where each check is going ahead of time. Keep track of all cash expenditures for a month so you know where your ATM withdrawals are going!”
Save, Save, Save!
You may be working now, but what happens at the end of your current contract? Unless you’re very lucky, there may be gaps between jobs so having some kind of backup emergency fund to keep you going is the key to longevity. Try to have at least a few months of savings based on your monthly budget – by doing this it will mean you can afford to choose the next freelance job that you actually want, not one that you need.
File Your Taxes
Tax season can be a pretty confusing time, especially if you haven’t been too organized throughout the year. It can take hours to file so keep all of your 1099 (for independent contractors) or W2 forms (for temp employees) saved. Clients should send these out by January 31st so start chasing them if you haven’t received yours by February. If you’re able to pay your taxes quarterly, take advantage of being able to pay off small chunks throughout the year to avoid being hit with a big bill when April comes around. If it’s within your budget, hiring an accountant can save you a lot of worry and time but it does come at a price.
Open a Business Account
By keeping personal and business accounts separate, you can avoid overspending and keep track of your income more easily. Pay yourself from your business account to your personal account so you have a dependable and steady income.
What advice would you share with freelancers? Have you learned from any mistakes? Share your thoughts with us on Twitter @ArtisanUpdates.
Laura Pell – Recruiter at Artisan Creative