Accounting and bookkeeping are vital parts of a freelancer’s business. They help keep track of the financial health of your business, which is essential in helping you make wise business decisions. As a freelancer, I can tell you that proper accounting and bookkeeping can make or break your business. It should be a top priority for any freelancer or small agency.
Don’t fret if you have no idea how to do it though.
To support the numerous independent contractors and freelancers, we’ve compiled a list of 5 accounting pointers to encourage you to keep an eye on your numbers throughout the year.
Here are some tips to help you out.
1. Seek professional advice
Talk to a licensed accountant and ask for advice not just on the things you need to keep track of and record but also on how to do them correctly. The government’s requirements may vary depending on where you live and on what kind of profession you have.
2. Keep track of your expenses and revenues
Take note of all your business income and expenses — document your invoices, costs, and receipts.
While this suggestion might appear fundamental, numerous freelancers wait till tax return prep to organize and sort their yearly costs, separating professional expenses from personal expenses.
The simplest method to organize and handle costs is to have a unique bank account for use for professional activities. It is not required. However, separating your personal account from your business account may aid you in making your accounting straightforward and in being more organized in daily transactions.
2. Have software in place
Reliable software, such as accounting software and invoice generators, for example, can make the process easier and faster for you. Platforms such as Hello Bonsai even offer branding & integrated payment and are ideal for freelancers who need to invoice their clients efficiently and effectively. The benefits of online invoice generators are many, including time-savings, protection against late payments and more straightforwardness with standard & transparent processes.
4. Prepare for tax season early
Know when the deadline for submitting tax returns but do not wait until the last minute to prepare for it. Hire a good bookkeeper to regularly update your books if you can’t do them yourself. Experts suggest setting a specific percentage aside from your revenues to be paid for taxes. Several online resources can help you estimate the amount to set aside for income purposes.
5. Don’t lag
Get into a habit that pushes you to obey your records weekly, even if it takes you a certain amount of time daily, or on a weekly basis. Nurturing this sort of a routine will assure that you don’t let your numbers slip and will place you in the right spot in terms of prepping for your taxes.
As a freelancer, accounting and bookkeeping can seem like daunting tasks. If you haven’t been proactive about your bookkeeping, accounting can get very stressful. Whether or not you’re a numbers person, it’s not difficult to manage your accounting efficiently and effectively by having the right systems and means.
Take control of your accounting. Doing so is essential for your freelance business.