Freelancers have become an integral part of the modern business world. As a sole trader, you’ll know at least few essential business skills, but accounting for freelancers is now one of the most important for your success.
The digital age has provided the technology and multitude of career paths to make freelancing a viable and lucrative occupational choice. As well as the skills you’ll need to be proficient and successful as an industry professional, you’ll also have to take on board essential business knowledge. Accounting for freelancers is not only vital for day-to-day finances, but also for the longevity of your brand. With that in mind, here are a few tips to keep your accounts in order.
Put Time Aside to Organise Your Finances
With so much time spent on work, dealing with clients and expanding your business, organising your finances may become less of a priority. Establishing yourself as a professional and a brand takes time, but despite your want and need to focus on the “big picture” aspects of your career, it’s vital to put time aside on a regular basis to sort out your finances.
You should get into the habit of sitting down once a week, once a month, or however often you feel is necessary, to go through your invoices and receipts. This will make sure that a huge pile of paperwork doesn’t sneak up on you and that you don’t misplace any important documents.
Keep Track of Expenses
Depending on your chosen profession, the amount of business expenses you pay for will vary. Many will be recurring from month to month, such as phone and internet bills, whereas others are one-off purchases for computers and other essential items.
As a freelancer, many of your financial outgoings will be necessities for work — and therefore an expense you can claim back against your business for tax purposes. To take full advantage of this, it’s crucial you’re aware of which expenses can be claimed against your business, so you can continue to do so for all future expenses.
Let Accounting Software Help You
Think about how much you use technology on a daily basis; whether it’s browsing the internet, communicating via social media, or for professional purposes using various forms of software and devices. In regards to modern tech, one of the most revolutionary additions to the business world has to be accounting software.
Modern accounting software eliminates the need for stacks and stacks of confusing financial paperwork; it also provides you with organised accounts in a digital format. Having a digital version makes it a simpler task to maintain orderly finances, as well as being a massive benefit when the panic of a small business tax return ensues.
Hire a Sole Trader Accountant
You might be concerned about sticking to a tight budget, or reluctant to pay for services that technically aren’t a necessity. But hiring a sole trader accountant will provide you with peace of mind and can actually save you money in the long run.
Accounting for freelancers can be a tricky part of the career choice. With no finance department at your disposal — like you would have as an employee of a company — it presents an unfortunate opportunity for inaccuracies and mistakes. Hiring an accountant will take the responsibility of organising finances out of your hands, leaving you with more time to spend on your everyday work and continuing to establish yourself.
Prepare for Your Small Business Tax Return
A looming tax return deadline isn’t very fun at the best of times, even if it’s just to cover your personal finances. So as a business owner, the tax return process can be even more confusing and requires a lot more preparation. Leaving things until the last minute in any situation will cause panic and stress, but with the potential of late fees and other fines, it could cost you money as well.
If you manage all of your own finances, it’s crucial that you’re aware of the deadline date for small business tax returns and that you familiarise yourself with the necessary forms. If you’ve decided that hiring an accountant is a better option to suit your needs, you’ll benefit from having everything organised and sent to HMRC in time. With that said, a sole trader accountant doesn’t have a financial magic wand, so it’s vital to make sure you provide them with accurate and up-to-date figures.
Accounting for freelancers and small company owners is an aspect of business that might prove to be more difficult than others. No matter how adept you are in your chosen industry, finances won’t necessarily be your forte. The tips above are simple, won’t require financial skills or experience and can be put into practice immediately. With the financial side of your freelance career more organised and less stressful, you’ll have the time and positive mindset to be more productive at work.