Five Tips For Managing Freelancer Finances

in Money Issues

A guest post by Mark James

My guess is that as a freelance writer, accounting isn’t among your favorite tasks. It most definitely wasn’t for me. It was rigmarole I foolishly put off and off, often leaving me a bundle of stress come tax return time.

Now though, working in-house for an online accountancy firm and ironically enough, writing about finance, I’m a little more clued up and a bit savvier when it comes to managing cash. So, if like the old me you’re a little bit lousy when it comes to managing your finances, here’s some tips that’ll hopefully help you get back on track.

Make sure you know the tax facts

Tax is taxing. Legislation is constantly changing 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 some of the basics, tax return deadlines and the like. The IRS offer tax workshops’ and ‘webinars that’ll help you with this, so they’re well worth checking out if you’re a little lost. It might help you avoid a nasty tax fine.

Create a routine

To those that aren’t accounting aficionados, sorting through your finances can prove an extremely dull process, as well as a bureaucratic nightmare.

As I know from personal experience though, put it off and it’ll just get worse. It’s therefore wise to put some time aside to do some bookkeeping every day, or at the very least once or twice a week.  Subsequently, this might help limit some of stress come tax return time.

Organize your paperwork

It’s important to develop a stringent system, especially where paperwork is concerned. Keep all your documents in a disorganized draw or shoe box and you could end up struggling to find the important documents when you need them most.

Instead, establish some sort of filing system, with different sections for invoices, bank statements and all the rest of your financial data. This’ll go a long way in reducing some of the stress that can result from document disarray.

Embrace technology

Even if you’re not among the more tech inclined, its worthwhile examining some of the accountancy apps and software on offer.

Largely, this software is simplistic, especially in comparison to the pad and paper method, as it provides a tidy online environment from which to do all your accounting rigmarole. Elsewhere, creations like receipt bank mean that you can do without keeping masses of receipts.

Establish a budget and stick to it

A fact of the freelance life is that there’s going to be periods of feast and equally, periods of famine. Ed Gandia’s 2012 freelance industry report reflected this, illustrating that this circle is one of the biggest challenges facing the freelance community.

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

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

How do you keep track of your finances?

A former freelancer, Mark James currently works in-house for small business accountants Crunch and Freelance Advisor. He specializes in business and finance but writes about soccer and music in his spare time, two of his passions outside of work.

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{ 9 comments… read them below or add one }

Diana Schneidman December 11, 2012 at 10:14 am

How appropriate to post this in December!

I’ve totally given up on dieting resolutions for the new year. I do my best every day and that’s that.

Instead, I have resolutions about tracking receipts, income and mileage on an ongoing basis. Doing pretty good with receipts and income but (unfortunately) wait till the end of the year to review my calendar and calculate mileage.

The secret is to set up spreadsheets, new checkbook registers and any other tools I use before January 1 so I have no reason to procrastinate in maintaining ongoing records.

-Diana
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annew December 11, 2012 at 11:35 am

Diana, yes, although I moved away from spreadsheets to software. Am now experimenting with youneedabudget.com – like it so far.

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Bethanny Parker December 6, 2012 at 8:33 pm

I use a spreadsheet and add a receipt # to every entry so I can easily find the proofs. All of the receipts are stored electronically in OneNote using a date-based numbering system.

I’ve tried QuickBooks but the spreadsheet is a whole lot easier.
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Charlotte Rains Dixon December 5, 2012 at 12:44 pm

Really helpful. My New Year’s Resolution is going to be to get a good handle on my finances.
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Mark James December 6, 2012 at 1:33 am

Glad the article was of help Charlotte :)

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Cathy Miller December 4, 2012 at 6:29 am

Sign me up with the Excel crowd. I have an accordion file for each month of the year’s receipts. I also have a budget with targeted goals for income, marketing, etc. One of those targets is Expenses, which I update at least quarterly. I start out monthly, but it always seems to end up quarterly. :-)
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Amandah December 4, 2012 at 5:37 am

I use an Excel spreadsheet but have been thinking about investing in QuickBooks or some other software. Then again, they’re all the same.
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Steff December 3, 2012 at 11:12 am

I use a spreadsheet and the good ole shoebox system. It’s not pretty, but since so many records are stored electronically, I find the boxes aren’t that full at the end of the year. I am horrible for leaving all my taxes till the end of the year, though! It would be much better to do them once a week, like you say, so I always have a picture of how I’m going!
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Mark James December 3, 2012 at 11:21 am

Yeah being a bit of a techy type I practically do everything online hence why I moved my accounts there! My dad swears by the shoebox system though and it’s done him no harm over the years. Definetely a good idea to keep on top of your accounts though… it was always an almagamation of stress and worry when I had to face my tax return!

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