Currently, more than one-third of the U.S. workforce is freelancing in some capacity. It is projected that in 5-10 years this will increase to be more than 50% of the workforce. While being a freelancer is a great opportunity and offers a lot of flexibility, there are some important things you must remember. This is especially true when it comes to your finances. Here are some financial tips for freelancers.
Create a Budget
It’s important to take some time to sit down and create a budget. Consider all of the programs, bills, and utilities that you will be paying and set aside a designated amount from each paycheck to cover those payments. Also, remember to set aside money for your taxes when it comes to tax season.
Set the Right Fees
Creating a budget first will help you decide what fees you should be charging your clients. You need enough to cover your costs and be able to make a living. Always charge your worth and set a fee that will fit your lifestyle. Of course, you also have to take your experience into consideration as well.
As a freelancer, you always hope to have a steady workflow, but that’s not always the case. Nevertheless, just because you might have a slow work month, doesn’t mean that bills don’t have to get paid. Be proactive, plan ahead, and set aside enough savings so that you are prepared for the worst-case scenario.
Keep Track of Your Expenses
Keeping up-to-date records will be worth it when it’s tax season or when it’s time to file any business reporting. Create an expense sheet to help you keep track of everything each month. This consistent habit will allow you to easily and accurately maintain your budget and prepare for any reporting necessary.
Separate Business and Personal Accounts
Always keep your business and personal accounts separate. Only use your business account for business transactions. If you need to make a personal purchase with business funds, then transfer the money with a note that the expense is for personal payroll. This is another tool to help you keep track of your expenses and make sure that you are not using money that should be for your business for any personal items.
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