There are certainly both pros and cons to becoming a freelancer, and tackling finances can fit into both those categories. Today we’ll teach you what you need to know about how to deal with finances as a freelancer.
Freelancers are essentially small businesses. With that, comes a lot of responsibility. Since it is essentially a one person show and all of the work, from administration, business development, and of course your day-to-day, is on your back. Here are four ways to help you better tackle your finances!
Separate personal and business bank accounts
Separating personal and business bank accounts is an incredibly smart move as a freelancer. It helps you keep track of which transactions are personal or for your business. It makes it easier come tax season, and generally, to be able to see how your business is doing. You can easily do this through your current bank by opening another account, or you can find a separate bank to use just for your business.
Set a budget and demand on-time payments
A big part of making smart business decisions is budgeting for yourself. Budgeting helps you keep up with your income and all other expenses. On top of this, you should make sure that you are being paid on-time from clients. Budgeting can help you in the event that a client pays you late because you can prepare for that ahead of time. However, that really shouldn’t happen often or at all.
Keep up with finances
Keeping up with your finances is super important. Making sure to check your budget and all your accounts often is essential as a freelancer. One way to do this is through Dave Ramsey’s Envelope System, which you can read more about here. Essentially, it is a system in which you use envelopes to track your money and stay on budget.
Set aside money for taxes & savings
Handling your own taxes can be stressful and scary and that is why it is super important to put away money specifically for them! Generally speaking, you should put away about 30% each month in taxes, but I am not an accountant so take from that what you will. Just make sure you have enough saved come April 15th. On another note, putting away money into your savings account is also very important. That money can be used for bigger purchases or protecting your business during slow times.