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How Can You Keep Track Of Your Business Finances As A Freelancer?

Going into business for yourself as a freelancer is a highly rewarding experience when you put in the work and start seeing your earnings come in. But being successful in it requires you to stay on top of things like paying your own taxes, keeping a close log of purchases you have to make from your suppliers and customer accounts receivables, and staying on top of your overhead costs on top of that. While there are challenges financially that you have to take on as a freelancer, there are a lot of online resources and software-as-a-service (SAAS) platforms that can help you. But there are a few basic steps you should take to help track your finances.

Form Your Business Entity And Figure Out How To Register It

For many freelancers and new startups, it’s recommended to form your business name, officially register it to give it an employer identification number and have it designated as the party that owns your business assets. This can save some complications further down the road, and it gives you the opportunity to grow your business later if you ever plan on hiring more people or entering into partnerships. Most single person businesses will register as a sole proprietorship or single entity, but depending on how you operate it, you may want to visit a local tax preparation or accounting firm to get advice on how you should register.

Open A Business Checking Account

One way to make sure your financial assets, and even physical assets such as new business equipment purchases made fall under your business is to get a business bank account. In doing so, you’ll have the place where your cash flow can be managed. Opening up a business checking account isn’t just as easy as opening a personal checking account, and sometimes there’s limitations on things such as cash deposits and minimum amounts that must be kept in the account. But some banks and credit unions do have business banking options that may be a little more friendly to startups that you may want to look into.

Invest In Accounts Payable And Receivable Software

Creating, managing the ledger and organizing both accounts payable and accounts receivable invoices can be a tedious and long task. Fortunately, new accounts payable software has become even easier to use today due to improvements in the layouts and template organizations that developers have improved in it. And many accounts payable SAAS providers have even started including AI applications or other machine based learning that can create invoices with the entry of a little data, and organize your bookkeeping ledger. Most bookkeeping SAAS platforms have become more and more affordable and even have smaller subscription plans depending on what you need them for.

Get Tax Preparation Advice

When it comes time to prepare your taxes, there’ll be a lot of items to sort through and different forms you’ll need to fill out. You want to make sure you don’t put your business under an IRS audit, but you also want to make sure you don’t overpay in taxes and hurt your cash flow. You might wonder whether you should have your taxes prepared and filed in-person by a registered CPA, or try to use tax preparation software to do it yourself. That may depend on your budget or which one you feel would give you a better return on investment. But you should make sure you’re using a reliable business tax filing service that will do it right the first time.

With the advances in technology of today, getting a financial edge for your business is easier than ever. When looking at financial software, you may want to see what the trial version of it offers and what users are saying about it.

 

Bogdan

Bogdan is the founder of Top Design Magazine. You can find him in Bucharest-Romania so next time you want to drink a beer there and talk about web and stuff, give him a message.