Freelancers tend to wear many hats, with bookkeeper and accountant being one of them. Although not often the most glamorous aspect of running your own business, staying on top of your finances is essential for your business to succeed moving forward. Without accurate financial data, it can be difficult to know how your business is doing and whether or not you are achieving your targets.
Keeping up-to-date with your accounting responsibilities will not only ensure that you are more organised but having accurate financial records will make your life much easier come tax time and help you to plan your freelancing future with more certainty. As a freelancer, your income is not guaranteed and you need to ensure that you strike the right balance with your finances to make sure you have some financial security if things take a dive.
Continue reading to learn how you can successfully manage and understand your finances as a freelancer so you can stay in control of your business budget.
Use The Right Tools
Nowadays there is a range of incredibly powerful, easy-to-use, simple to set up financial tools that you can use to manage your accounts more efficiently. Payroll, accounting and invoicing software such as MYOB invoicing software, will instantly put you back on track with your financial management. These tools are designed to integrate seamlessly with your existing systems, automate many mundane and time-consuming tasks, and ensure that you stay on track with all of your financial obligations.
Budget For The Future
Budgeting is an important task for any business, big or small. As a freelancer, you generally do not have a regular income each month. While you might have some repeat clients, many freelancers experience peaks and troughs throughout the year when it comes to their earnings. Because of the erratic nature of your income, it’s important that you set some money aside when you have extra to see you through those leaner months.
Separate Your Personal And Business Finances
Having separate bank accounts for your personal and business finances will make things much easier when tax time rolls around. Instead of sifting through your accounts trying to remember which expenses were related to your business and which ones were not, you will have everything in one place, making the process much easier. Opening a business account can usually be done free of charge and if you haven’t done this already, you need to make it a priority.
Pay Yourself A Wage
Even if it’s not very much in the beginning, you need to be sure to pay yourself a wage each month. Not only does this help you to manage your finances better but it gives you a little bit of breathing space and separation from your business finances. As a freelancer working for yourself, this can take some discipline, especially during those periods where work is less plentiful. However, paying yourself a wage is crucial, not only in helping you manage the money you have but also in viewing the viability of your freelance business as time goes on. If you get to a point where you can no longer pay yourself, you might need to look at new opportunities.
Learn To Manage Your Finances As A Freelancer
Working as a freelancer is wonderful. You can set your own hours, work with clients you like and determine your own future without having to answer to anyone else. But to ensure that you can continue working in a freelance capacity you need to learn how to manage your finances effectively. With the right approach to financial management, you can ensure that you are set up for success from both a business and personal point of view moving forward.