Before we start, I must say I am not a lawyer nor am I an accountant or financial planner. The information included in this post is based on personal experiences with my finances as a freelancer. I by no means have it all figured out and there is a lot I still do not understand but the following were my first steps in my efforts to get my business in order.
If you have all of your contracts, invoices, and receipts filed and organized, you're already ahead of the game.
Keep Personal and Business Accounts Separate.
The first time I started to take money for freelance work, I put it straight into my personal checking account (and probably spent it the next day). I quickly learned that this was not the proper way to run a business. You need separate bank accounts and credit cards for your business income and expenses. The different accounts make tax season a lot easier.
Use Accounting Software (costs).
For those who don't mind the investment, Quickbooks for Self-Employed is a TIME. SAVER. You connect all of your financial accounts, categorize transactions, track mileage, calculate taxes and even generate reports. It's pretty much your own accountant intern for about $5/month.
Don't Forget About Taxes.
Put some away. You don't want to get to tax season and realize you didn't set any money aside from your income taxes. Consult with a professional about what percentage of each project/service rendered is a good idea to save for tax season.
Pay Yourself Regularly.
This approach may differ from person to person but either way, you'll want to reward yourself. Figure out what pay schedule works for you. I currently still have a full-time job along with my freelance business so I pay myself less frequently - monthly. If your freelance busy is your sole source of income, of course, you'll want to be on a more frequent schedule for a sense of normalcy.
Now, this may all seem like a lot. It was for me and sometimes it still is. But I started with a spreadsheet where I tracked my income, expenses, and transactions. That's the beginning - documentation. Make yourself accountable. Grab the spreadsheet I set up for you to get started!
This business budget and income spreadsheet template can be used for any type of business. Customize your template to include the specific cost of items that apply to your company! Formulas have been included in certain cells to automatically calculate totals for you.