Some tips for managing freelancer finances

A guest post by Finance and Business Writer, Mark James currently works in-house for small business accountants Crunch

freelance finances

Image – by Images_of_Money

I’m guessing that as a freelance graphic designer, doing your accounts doesn’t tickle your fancy much. I know it didn’t for me whilst I was a freelance Writer. It was rigmarole I put off and off foolishly, leading to an amalgamation of calculations, frantic form filling and debilitating stress come tax return time.

Now though, working in-house for an online accountancy firm, I’m a little more clued up on all things financial and savvier when it comes to managing finances. So, if like the old me you’re a bit suspect when it comes to managing your cash, here’s a few tips that should see you right….

Get up to speed with the tax facts

Tax is taxing. Legislation is constantly changing in line with new political regimes and frankly, it’s difficult to keep track of.

That said, if you’re without an accountant, it’s worthwhile attempting to get up to speed with the various tax return deadlines and trying to get your head around what or what you may not be liable to pay. Here in the UK the HMRC have recently introduced ‘webinars’ to clarify all of this, so that’s well worth checking out if you’re UK based and a tad clueless. Nobody wants a nasty tax fine.

Establish a routine

To those not accountancy inclined, sorting through your finances can prove unrepentantly dull and a bureaucratic nightmare. Even more so if you’re uninitiated in the process.

The longer you put it off though, the worse it’ll be later down the line. I can vouch for that personally. It’s therefore wise to put some time aside for some bookkeeping every day or at the very least once or twice a week. Subsequently, this should help keep some of the stress at bay.

Organise your paperwork

It’s important to develop some sort of system, especially where paperwork is concerned. Chuck all your documents into a disorganised draw or shoebox and you could end up struggling to find that important document when you need it most.

Establish a filing system, with different sections for invoices, bank statements and the like and you might spare yourself some financial grief come tax return time.

Embrace technology

Online accounting has made things easier regarding the management of freelancer finances, reducing the complexity that’s often involved in using a DIY software package and a separate accountant.

This software can reconcile your outgoings with your bank statements, work out tax and produce clear graph visualisations all in a nice little package. Essentially, it provides a tidy and easy to use online environment from which to do all your accounting rigmarole.

Budget, budget, budget

A fact of the freelance life is that there’s going to be periods of feast and equally, periods of famine. This perpetual circle will obviously have an impact on your finances.

With that in mind try to keep to a budget and elsewhere, embrace financial tools like cash-flow forecasting. This should provide you with a better picture of your finances, whilst helping you to legislate for any lean periods.

Hopefully that’ll be enough to help you get your financial affairs in order. Taking control of your finances will do your mental well-being the world of good. Trust me.

A Finance and Business Writer, Mark James currently works in-house for small business accountants Crunch. You can find him on Twitter @MarkJames891.

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10 Comments

  1. Posted December 13, 2012 at 6:13 pm | Permalink

    Hey thanks for the good advice,

    What online apps are the best for doing my own accounting online?

  2. Posted December 18, 2012 at 11:07 am | Permalink

    Very good article, a lot of people say they couldn’t freelance, not knowing what’s coming up but if you manage it probably and keep some saved away you’ll be fine.

    An agency tested my spare resources to the limit last year! lol

  3. Posted December 23, 2012 at 5:17 am | Permalink

    Great info! I think for me, it might be worth it to save a little time, and to actually pay for an accountant (instead of keeping updated on what taxes are owed and when)…but of course, it will be different for everyone!

  4. Posted December 26, 2012 at 9:39 pm | Permalink

    I think its pretty important to have a back up capital if u want to commit to freelancing. Now that its the next year and i have plans myself for freelancing im gonna give it my 100 percent and these tips will help me alot, so big thank you!!

  5. Posted December 31, 2012 at 12:23 pm | Permalink

    Thanks for this great tutorial, very informative. I wrote some down to keep following these guidelines. Thanks again!

  6. Posted January 1, 2013 at 8:35 am | Permalink

    Regarding this question i’m following the get-things-done-idea.
    So, the most important thing for me is to have a (at least simple) system which allows me to track incomes & expenses.
    I’ve found this to be much more cruicial than everything else, since you are depending on the money-”system” (even as a social charity freelancer ;-)
    I’m using excel sheets to manage all this stuff, its irrelevant which tool (or type of tool) you use as long as it let you keep track of your important numbers.
    The financial nitty gritty is much more prio 1 than everything else.

  7. Posted January 9, 2013 at 4:44 pm | Permalink

    Great article from the perspective of an accountant…

    Lots to add but if we stick within the brief and keep it accounts focused:

    Learn that, pretty much every desision that you make will cost you money.

    Learn to negotiate with suppliers.

    Relise that by taking the leap you are no longer just a freelancer but first an foremost your a sales person as well.

  8. Posted January 24, 2013 at 8:57 am | Permalink

    Thank you for this amazing tips. I am freelance writer and i must admit it was quite an uphill task for me to manage my finances properly in the first one year. I want to reinforce on the issue of budgeting as it is the only way one can get organized. Like it has been said in the article freelancing is seasonal and unless you budget properly, sustaining a business can be a huge challenge. This way it will be easier to brace yourself for all seasons and also keep you a breast of your financial standing.

  9. Posted January 25, 2013 at 2:17 pm | Permalink

    Great article. I love working for myself but do find the finance side of things a bit of a headache sometimes.

  10. Posted February 22, 2013 at 6:19 pm | Permalink

    i earn my income as freelancer so i have to take care of some months in which i am not working or u can say a hand on fund which is need on vacation,illness

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