If you’re a freelancer or someone who works on a contract-basis, it can sometimes be difficult to keep a handle on your finances – irregular income, taxes, expenses – there’s a lot to get your head around! It’s a good idea to sit down and have a chat with an expert, but in the meantime, here are a few tips to help you out!
1. Have some emergency savings
You might be inundated with work at the moment, but one of the not-so-exciting parts about working as a freelancer is that there can be times when you don’t have any projects going on and this means less money coming in. In order to keep yourself afloat in case the work does dry up at some point, it’s a good idea to keep a healthy amount in a separate savings account. The amount will depend on how long you think it will take to source more work, but usually a few months’ worth of expenses is a good benchmark.
2. Keep as many records as you can
Rather than just keeping track of expenses and incomings/outgoings, it’s important to really scrutinise everything you’re doing, especially since it could save you time and money in the long run. Keep a record of the hours you’ve completed for each client and what these were made up of, the cost per hour (if you work it like that) for each client, and any other important details. If you’re spending more time than you should be on certain things, maybe you need to either cut down or charge more.
3. Get paid quickly
It can be easy to let late payments slide if you’re busy with other work, but it’s not a good habit to get into, especially if you suddenly find yourself with nothing going on. Make it clear from the outset what your payment terms are and what the process will be if there is a payment outstanding. If you’re invoicing promptly and following up regularly, you shouldn’t have too many issues, but do set reminders to check in with those who are yet to pay you and be polite but firm when chasing them up.
4. Sort your expenses
You might feel pretty confident with how expenses work for you, but many freelancers still leave it until the end of the tax year to wade through all of their receipts and get their expenses sorted. To save you valuable time, keep track of it all throughout the year and have a consistent system in place that contains the details and receipt of each expense. If you’re unsure how offsetting your expenses against your tax works, get in touch with our expert accounting team and we can show you what you can and can’t claim as an expense – it could definitely work in your favour!
Here at Haven, we’re experts at helping freelancers get their finances sorted, no matter the type of work that you do. For a free, no-obligation chat, get in touch with us today!