There are some struggles for freelancers to get paid for their work, there is always a level of stress when it comes to sending an invoice!
Freelancing sounds so attractive: you get to choose your schedule, be your own boss, and get a steady stream of satisfied customers. These customers need to pay you and you need to adhere to their rules and operating practices.
Are you good at your own bookkeeping? Well, it is not so pretty. Many freelance professionals’ main goal is to get compensated for their services. However, there are a variety of alternative options related to the use of resources once they have been received.
How do you maintain track of payments, taxes, record keeping, invoices, expenditures, and other details? There are 12 months in a fiscal year, which is the timeframe used in bookkeeping. In some instances, the fiscal year won’t correspond to the calendar year. As a freelancer, you better understand money, business, and cash flow and you must continuously maintain precise records of your business operations.
Are you ready to discuss bookkeeping right away? Let’s talk about freelancing bookkeeping basics.
1. Log Everything
As a freelancer, accounting is crucial for filing taxes. Keeping your company and personal accounts separate helps with accounting. Many freelancers and small company owners set up a receipts-only email account if they don’t use bookkeeping software. Send images and digital receipts there so you always have them.
2. Utilise accounting/bookkeeping software
Even though accounting and bookkeeping for independent contractors may seem overwhelming, using accounting software may make a huge impact. When selecting one, it should have important bookkeeping features, such as tracking and reporting on expenses, as well as tools that assist freelancers, like tax calculation, tracking mileage, and tracking invoices. You may try Zoho Books, QuickBooks Online, FreshBooks, and some other cheap, or free bookkeeping software products.
3. Set aside tax money
In contrast to a typical employee, your tax is not taken from your compensation. That implies you’ll need a savings strategy and self-control to save enough for your tax liability. This is important. If you fail to pay your tax obligation, the government is unlikely to be lenient. Therefore, set aside the money and record it in your accounts.