In order to ensure that your business is financially fit, you need to have certain freelance financial staples in place to keep things running smoothly. It’s not as simple as dumping a bunch of money into the same account and figuring it out from there. The reality is this method can lead to a lot of disorganization and financial trouble.
Instead, you want to make sure you have these financial staples in place for your freelance business.
Incorporate your business.
In order to protect yourself and your personal assets, you need to incorporate your business. This basically ensures that if your business ever gets sued (among other things) your personal finances don’t get roped into it.
Not incorporating your business and finding yourself in this kind of situation can lead to financial ruin for both the business and your personal life, which is why incorporating your business is one of the most important freelance financial staples to get handled as soon as possible.
How you decide to incorporate your business is up to you, your accountant, and your attorney. For example, in you may have certain tax advantages in your state if you incorporate one way versus the other. Or, perhaps your accountant thinks you aren’t making enough in revenue yet so it doesn’t make sense for you to incorporate a specific way. Maybe you have partners, which opens up a whole new set of questions.
Make sure to discuss all your options with an accountant or attorney to figure out which type of incorporation works best for you and your business.
Have separate bank accounts.
You need to separate your business and your personal finances. This makes things much easier come tax time and it helps you stay organized in both your business and personal life.
Fortunately, this is a financial staple you can do pretty easily. In the beginning, it may look like just have two checking accounts. Once you incorporate your business, as mentioned above, you can then open a business checking account. You should also take it a step further and open up a savings account for your business that you can dip into during lean months.
Find an accountant.
If you have absolutely no history or experience in accounting you’re probably better off hiring a CPA. In fact, this is probably one of the most important freelance financial staples you can have because it saves you both time and money in the long run.
If you’ve ever tried to figure out estimated taxes on your own, then you know it’s enough to make you want to rip your hair out. Additionally, accountants can help you tax plan for the entire year and, in some cases, do your bookkeeping so you can focus on making money.
Invoicing program, service, or software.
Thanks to technology, sending an invoice is as simple as setting up an account with a service like Due, inputting the information, and sending it off to a client. There’s no longer any need to manually create invoices on Microsoft Word or wait for a check in the mail.
Invoicing services are pretty high up on the list of freelance financial stapes for your business because they ensure that you stay organized, get paid faster, and accept multiple forms of payment. By having systems in place you can keep the cash flow coming.
Final Thoughts
If you want to run a successful freelance business, it’s imperative that you stay organized by incorporating these freelance financial staples into your business. Otherwise, you may never feel like you’ve got your business and personal finances under control.
