As a freelancer, you wear a lot of hats. In addition to the services you provide, you also have to deal with a lot of administrative work as well. In a traditional job, you typically have a Human Resources department, an Office Manager, etc., to take care of the majority of this work.
Freelancers, however, need to be on top of their administrative work in order to get paid. This means following-up with various clients, sending out invoices, negotiating contracts, and paying taxes.
Accounting can be a nightmare as a freelancer if you are not organized. Here are some helpful tips on accounting as a freelancer, and staying organized.
Create a Spreadsheet
As a freelancer, it is likely you are dealing with various clients, various pay rates as well as due dates. In order to stay on top of everything, it’s key to have all important details noted somewhere that you can easily access.
For me, I have created a spreadsheet that lists the clients name, pay rate, due date, and any special notes, such as how they prefer to receive an invoice, or when they pay. To ensure I meet my deadlines and follow-up on my payment, I follow the spreadsheet so I can keep track of what I need to do and when.
Send Invoices Online
Tracking your invoices has never been easier with the multitude of invoicing options online. Most people use PayPal to send digital invoices and receive payments. Creating an invoice in PayPal is easy and allows you to track what has been sent and what has been paid.
Another option I’ve heard great things about is Freshbooks. Freshbooks is an invoicing software that makes it easy for you to get paid. Freshbooks seamlessly integrates with PayPal and offers a variety of features including the ability to: track invoice views (don’t you want to know if your client has seen your invoice?!), send invoices via email or snail mail, as well as adding late fees if your client has not paid on time.
Whichever method you use, keep track of all your income and save all your invoices for future reference. It will save you from a headache later on!
Track Your Business Expenses
In addition to staying on top of your various clients, due dates, and invoices, you also need to closely monitor your business expenses. Tracking your business income as well as your expenses should go hand in hand, so you can assess the financial viability of your business.
If you think you are making good money, but are not tracking your business expenses, you might be in for a surprise.
Freelancers should create a profit and loss statement, which helps you track your income and expenses during the fiscal year. Use this free template to get started and stay on top of your income and expenses. In addition, it’s important to track all receipts for your expenses in case of an audit.
Hire an Accountant
As a freelancer, your hope is to grow your business. As your business starts to expand and you take on bigger projects, you might need some professional assistance with your accounting. At a certain point, hiring an accountant can be beneficial for your business, to keep you in order and ensure you have systems in place to run your business effectively.
The benefit of working with an accountant is that they can take care of some of the more unglamorous, number-crunching aspects, so you can focus on your business and getting more clients.
In short, regardless of where you are as a freelancer, it’s important to track everything that comes in and out of your accounts, to stay organized with your files and invoices, and look into professional services if need be.
How do you stay organized as a freelancer?
