Working as a freelancer in USA – and around the world – can be highly rewarding, letting you choose your own clients and your hours. However, it also means that you need to act as your boss at times, dealing with your accounting, your expenses, and at tax time, and your own paperwork. Even a professional accountant can only do so much from the outside. Today, we’re going to look at a few ways that you can make sure that you’re doing everything you need to do to keep the books for your business.
1) Decide in advance how you will track income and expenses. There are different ways to monitor the amount of money you make and the amount you have to pay for expenses. Whatever method you choose, you should be consistent, and that means at bare minimum deciding in advance which method you will use. For example, in most cases, you will use the Cash method for income – meaning you track income as you get paid, not when you invoice or earn money. However, for some types of freelancing, you may find it more straightforward to use an alternate form, such as billable hours. Whatever method you use, you should choose in advance and then stay consistent. Ideally, you will want to use professional bookkeeping software for this purpose.
2) Keep receipts and other vital paperwork. Freelancing can be hard work and often involves juggling clients and other commitments. However, make sure to keep track of the details. Keep receipts for business expenses, and keep invoices showing how much you were paid for what work. One day you’ll be glad you did.
3) Track payments due. Depending on how and when you get paid, you’ll want some software that will help you track the work you’ve done, when you did it, and when you are supposed to get paid. In addition to having this information around for tax season, you can use it to track late payments and to pursue clients who should have paid you but haven’t yet. Utilizing online bookkeeping services also serves an asset to free up your time by providing you up-to-date financial snapshots of your finances and business cash flow.
These simple tips can make a large impact on your freelancing business and can make a positive influence on the health of your operations.
In our next blog, we will highlight the remaining tips needed for freelancer’s to better structure their on-going financial habits.