5 Ways Freelancers Can Keep On Top of Their Finances

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Being a freelancer can be extremely rewarding, with a sense of freedom that many people would love to have. The problem for some freelancers is that with too much freedom and laid-back lifestyle, the pressures of running a business as a one-person band can get on top of them, and they can make mistakes and become disorganized.

The worst area freelancers can get behind on is with their finances. Without being careful and organized with spending, expenses and knowing what’s coming in, you can quickly get overwhelmed, and the walls can soon start tumbling down. Let’s take a look at five ways freelancers can keep on top of their finances:

Create Spreadsheets for In-goings and Outgoings

Sometimes it’s best to keep it simple. Creating two separate spreadsheets on Excel for your finances coming in and keeping track of what you’re paying for is the tried and tested way of keeping on top of your finances, but it means being organized, being consistent and not slacking off. You can’t fake or estimate your earnings and outgoings. You have to be correct, so enter them every time you have something goes out or come in. You’ll quickly fall behind otherwise.

Keep Your Receipts

Freelancers should definitely get into the habit of keeping all of their receipts. Everything from train fares to stationary, coffee with clients and laptop surgery should be recorded, so that it can be added to your tax return as expenses at the end of the tax year. It pays to be organized though, or you’ll find yourself going through thousands of pieces of paper at the end of the year, which will be a bigger headache than it needs to be. Put all your outgoings on your spreadsheets, and then keep the receipts as evidence, nothing more.

Get Your Invoices in Order

Freelancers need to get paid for the work they do, and in order to do that, you need to create and send invoices to send to clients. If you’re not a dab hand at creating invoices, use a check stub maker to generate one that looks professional and is more likely to be paid on time as a result.

You should keep every invoice in a folder and check them off whenever they are paid. This way, you can keep tabs on the clients you need to chase up for payment and avoid any embarrassment when you chase something that’s already been paid.

Stick to a Budget

Getting paid at the end of the month by one employer keeps you in check, so it’s very easy for freelancers to get carried away when they keep invoices paid here, there and everywhere. You can get a little over excited when the money comes in and start paying for things you might not need instead of saving for the big tax payout. If you can, try and create a budget that you stick to each month. For example, set aside money for you, money for your business, and then put some aside for the tax year payment. This way, you won’t suddenly find yourself in a jam when something comes up that needs to be paid, and you haven’t been careful with your money.

Hire an Accountant

As a once-per-year payment, hiring an accountant to sift through your finances at the end of the tax year isn’t the worst way to spend your money. They will go through every receipt, every invoice, and discuss ways that you can save money in certain areas. An accountant can be a good asset to have as they do this for a living rather than once a year, so pick their brains whenever you get the chance. Not every freelancer needs an accountant, but if you’re not the most organized person, they can be a lifesaver.