As a freelancer, it can be hard to keep track of your finances. With lots of new clients (and likely many different payment structures and methods), you may struggle to keep track of how much money you have earned, which clients need to pay, and when their invoices are due.
With this in mind, bookkeeping is an essential skill to grapple with when you start as a freelancer, as it will make your life much easier in the long run.
So, what do you need to know and implement when it comes to bookkeeping? Here are three things you’ll need to know about bookkeeping as a new freelancer.
1. Hire an accountant or sign up for online accounting software.
One of the first steps you should make as a freelancer is to hire an accountant or make use of online software platforms.
When it comes to a traditional accountant, while you may think you only need their services once a year, accountants will undoubtedly be able to give you pointers, recommend useful applications and can help you to structure your bookkeeping.
With an app or online software system such as Pandle, you can use the software every day to keep your paperwork, billing and taxation obligations well organised and compliant with the law.
2. Details you should include
However you choose to manage your books, there is vital information that you need to include whether you devise your own system, use a plan your accountant recommends or specific accounting software. The information you need to make a note of includes;
- Number of jobs completed or hours worked for each client
- Cost of each task or hourly rate
- The payments you make
- The payments you receive
- All expenses (travel, stationery, equipment, ).
3. How you can save on your tax output
When it comes to bookkeeping, you’ll not only want it as a way to provide proof of income; you’ll also want to make sure you are saving all possible tax.
Expenses can offset some of the taxes that you will have to pay, so it is essential to make a note and keep a receipt for every expense. These expenses include your travel, when you are working somewhere that is not your usual place of work, bills for power and utilities, office space (even if you work at home), internet and phone bills and vehicle maintenance if you use a vehicle for business purposes.
With these three steps, you can start to make sure your bookkeeping is simple and stress-free. The next important step is to ensure you stay on top of your books, so you have one less thing to worry about when it comes to year-end settlements.
Are you starting out as a freelancer? What obstacles have you come up against so far? Leave a comment below or get in touch on Twitter!