Working as a freelancer comes with a unique set of financial concerns. Freelancing involves doing work as you get it, so your income will often be unpredictable. Taxes can be a little more complicated as you’ll be considered self-employed. Additionally, you may need to invest in some equipment to be able to do your work to the best quality.
Due to all this, it’s important to manage your finances carefully as a freelancer. The money you gain needs to support you as well as your career. No matter what kind of freelance work you do, here are some tips that can help you.
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Keep Records
Since you’re operating by yourself, it’s important to keep track of everything. Keeping records of when you did work and how much you made for it can help in many ways. Keeping an eye on how much profit you make each week lets you know how much you can afford to use in your weekly budget. Additionally, if you start to make less money, you can figure out how to solve the problem.
Remember to store any invoices you send out to your clients. Having records of income is especially beneficial when it comes to filing taxes. If you have a client who doesn’t pay you, having a dated record of what you owe will help you get what you’re owed. It might also be worth recording your weekly income in a spreadsheet so you can see how well you’re doing each week.
Store Receipts
Whenever you buy anything that helps you do your work, don’t throw the receipt away. Instead, store all your receipts together in a storage box. You may even want to scan them. This can help you keep track of how much you’re spending on your work, but more importantly it helps with taxes.
When it comes to filing your taxes, business expenses can be deducted. If you work from home, you can get a deduction for your rent. If you use a car to meet clients, you can also get deductions for travel costs. If you do most of your work online, be sure to have the receipt for your computer handy.
Get Help
Although you’re operating alone, it doesn’t mean there isn’t help out there for you. There is plenty of advice for freelancers on the web, as well as helpful services and software.
Those in employment have their income tax taken from their paychecks. As a freelancer, you’ll need to handle it yourself. It can be tricky, so it’s best to have a taxation lawyer to help with any issues.
You should also make use of all the internet resources available for freelancers. Check out some of the best software and services for freelancing. These can help with finding leads, doing your work, and managing finances.
Separate Your Money
As a freelancer, the money you make is your business revenue as well as your personal income. You’ll need money for your personal budget, but also have to set some aside for things like taxes and work expenses.
You may want to open a separate account for your freelance work. You can budget how much you take from this for your personal expenses each week. Having clients pay to a separate account also helps, as you’ll have all your income recorded on your bank statement.
