Although bookkeeping is an important aspect of business for freelancers, the multiple tasks that freelancers handle at the same time leave them with little time to maintain records. However, proper bookkeeping will help to keep track of all invoices and collect payments from clients. This will ensure proper cash-flow management. If you are not able to make updates and maintain accounts regularly, you should consider hiring an accountant.
Create an organized system
Proper bookkeeping requires that freelancers keep their systems organized at all times. This means beginning immediately you start freelancing, seeking the expert advice and guidance of a professional bookkeeper and using recognized accounting systems. Once you have done this, you will need to set aside time to do the books every once in a while.
Maintain records of key parts of the business
There are certain financial transactions that would be easily ignored yet they affect the financial health of your business. Ensure that you keep clear and accurate records of the hours worked and jobs completed, all business expenses, the cost per hour of each of the jobs, all payments your business makes as well as all the payments you receive from clients.
Consider using accounting software
Today, thanks to advances in technology, there are a number of accounting applications that will help you maintain proper records. The software will ensure you generate accurate invoices, produce cashflow reports regularly and help you rate your clients. Another important benefit you will enjoy is the ability to monitor the money you owe others as well as those owed to you.
Offset expenses against tax
We advise freelancers to work with their bookkeepers when seeking to offset their expenses against tax. The experts will help you through the process and guide you on how to keep records of the details. Some of the expenses you can offset include client entertainment expenses, office rent, travel expenses as well as power and utility bills.
Ensure faster payment
Proper and accurate bookkeeping can help to ensure that freelancers are paid faster. With the huge challenges that freelancers face in collecting payments, bookkeeping will help in sending invoices promptly, setting reminders for invoices approaching their due date, identifying late payers and making follow-ups for payment.
Put money aside for the tax bill
Unlike regular employees, freelancers will not have their taxes deducted from their pay. This is why you will need to not only be disciplined but also use accounting software that helps you in estimating your tax bill. This will go a long way in facilitating proper tax planning.
Our business provides bookkeeping, accounting cleanups, QuickBooks training and new business services to allow you enough time to focus on your core business. Reach out to us to find out how we can help you save time and money.