Editor’s Note: Here at Dispatches, we are always looking for ways to help our readers do things. For some of our readers, that means helping navigate the working world, for others, it means assisting in the ever challenging question, “what’s for dinner?” For still others, it means figuring out how to balance family life with everything else. In an effort to aid in all of these endeavors, we have collaborated on this article written specifically for our readers.
Freelancing has a range of benefits. Of course, there is the flexibility of picking your working hours and getting to complete projects from home. A downside is a financial aspect. As a solopreneur, it is your responsibility to ensure all of the details are attended to and all of the requisite items accounted for in your paperwork. Otherwise, you may be quite surprised come tax day. Keeping your books in order from the start is your best bet.
The Extra Mile
A lot goes into pricing a job. As an employee, it’s hard to see the small and large details, but, now, you have to be aware. A budget is one thing, but a comprehensive plan is essential to avoid debt and underpayment for your work. With that in mind, always think about tax contributions as well as health policies and the cost of labor and production. One more thing to add to the list is retirement. You probably don’t want to be freelancing well into your retirement years. Putting a little bit aside helps, so think about the future when you set a price for your goods or services.
Separate Business Account
Organizing money is hard enough without dealing with two sets of income. Therefore, a business account is essential as it prevents confusion. With a fund that runs parallel to your personal one, everything that goes into it should be business-related. So, it has nothing to do with life outside of work and can’t mess up your finances. As a rule, open a new account for different aspects of the firm. Of course, you should work with a financial planner and accountant to determine exactly what is best for you and your specific business.
Proof Of Payment
The evidence is something that will help with the organizational side of being a freelancer. Receipts are imperative, and a check stub maker can churn them out online. Along with evidence from your online banking, they should be enough to cover your back in a crisis. Store files on a computer and offline to ensure nothing goes missing or disappears.
Additionally, do not forget to plan for an emergency fund. This isn’t for personal use but the company. Yes, things are going fine and there seems like there is no need to be cautious yet that’s why they call it “unforeseen circumstances”. No one sees bankruptcy or debt coming and they still have to find the cash somehow. With a contingency plan, there should be plenty to cover the majority or part of the payment. Even with the latter, it will buy you time.