As a self-employed individual, you are expected to take on all of the baggage that comes with starting and running your own company. Yes, if the money is available you can hire other people to take on some of the responsibility. But, if its not, you will need to learn how to do it on your own.
Successfully and efficiently logging income and expenses is vital for every company, both so that you can understand how your business is performing financially and so that you can file tax returns. There is a lot that can go wrong even for self-employed individuals with smaller operations. Here are some bookkeeping tips that will help to prevent you from falling behind or getting into trouble.
1. Be Honest About Money Coming In and Going Out
Because you are a freelancer and in charge of what you make and what you spend, it is easy to disregard certain expenses. The truth of the matter is, every dollar counts. Nothing should be swept under the rug.
The importance of tracking expenses is not an empty threat when it comes to tax audits. It can certainly happen to you as it happens to many self-employed individuals every year. Be sure to account for all expenses and all incoming money. Regardless of whether you are self-employed or running a large company, if you leave things out, it can put you in a dangerous spot.
Not only is it good to make this a habit to stay out of trouble with the tax man, it is a good way of logging what is going on so you can understand the financial performance of your business. This can come in handy when trying to plan for the future by providing you with information to make better decisions.
2. Be Frugal With Your Money
Making money is very exciting and often entices spending it. Don’t put yourself in a ditch because you impulsively bought things and did not leave any wiggle room for unforeseen expenses and your annual tax bill. To prevent this from happening, log the amount of money you made, calculate the amount of tax that will be due, and put aside that money.
Don’t just make a ballpark of how much to spend. Design a budget. Keep it in mind and stick to it. Along with a budget, make sure to put away a certain percentage of every paycheck into a savings account. You will be thankful to have this when certain expenses or your taxes end up being more than what you expected them to be.
Keep up with your income and expense reports. Don’t let anything slip through the cracks. Be sure to log every expense, paycheck, taxes, etc. You will be glad you did.
3. Be Attentive and Up-To-Date
The last thing you want is the snowball effect of getting so far behind on your records that you are intimidated from ever beginning the catch-up project. Put an alarm on your calendar that reminds you every week to make sure that your logs are up-to-date and correct.
Don’t procrastinate with taxes either. It would be beneficial for you to get ahead and also make alarms on your calendar for tax deadlines. Self-employed individuals often need to pay quarterly estimated taxes. These alarms will prevent you from missing deadlines and incurring late fees.
4. Get Educated In Finance
Although it would be nice to only have to worry about cash flow, there is a lot more that goes into the finances of a company. There are so many ways to cut back, save, and make more money by evaluating your pricing and cost structure properly. If that is not in your field of expertise, it would be best to look into hiring a professional if you can afford to.
You would be surprised at how many resources there are that help the self-employed through tasks such as these. Search around on different websites and get in touch with people who may know a thing or two about the issues you are grappling with. There is a good chance that a number of people in your network are going through, or in the past have gone through, the same challenges and would be willing to lend a helping hand. When you want your own business websites, visit http://www.webdesign499.com/fort-lauderdale-web-design/.
5. Be Aware Of Bookkeeping Options
There are a number of free software packages available on the internet that could be a first step in the direction of bookkeeping. If you find this still being too much of a headache, there are companies, such as SmartBooks, that take on that headache for a very affordable cost.
If you find yourself falling behind on your reports, there are also apps that allow you to do some of the bookkeeping on your mobile device. This might help you keep up if you are always on the run traveling.
Stay updated and educated. You don’t want to miss out on a financial opportunity that might be best for you and your company. By keeping these tips in mind, I am sure bookkeeping as a freelancer will be a more comfortable task.
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