No one ever said being a freelancer was easy. Well, no one who has ever done any freelance work, at least. As a freelancer, you always have to juggle multiple tasks, such as:
- Managing and building your brand
- Generating more leads and new gigs
- Doing great client work
- Getting paid
- And to top it off: finances
A lot of freelancers seem to hate to talk about finances, even if it can make or break their business. Fortunately, there are a few shortcuts you can take to lessen the amount of time you spend on these tasks. It all starts with automation.
You should automate as many of your financial transactions as possible to focus on the more important part of running a business: Making more money. That way, you won’t spend your day deep inside spreadsheets trying to figure out how much you owe the IRS.
Here is a three-step process to help you automate your finances, so you can spend less time managing and more time earning money.
THREE STEPS TO AUTOMATE YOUR FINANCES
- Separate Your Personal and Business Accounts
The most difficult part of managing your money is keeping track of personal versus. business earnings and expenses. Wouldn’t it be easier if you simply opened a new bank account and expense card for your business? By doing this, you’ll never think twice about whether a meal was a business expense or personal. As long as you keep track of your receipts, and use your bank accounts as intended, you’ll be prepared during tax time. Which brings me to my next point.
- Speak To Your Accountant
Often times, you may find yourself talking to your certified public accountant (CPA) only when tax time is near. After all, why would you think about your CPA or tax preparer during the rest of the year? This once-a-year approach may end up costing you time and money because you won’t have tracked and kept records of all of the potential tax deductions you can use. It can also create a headache for your CPA or tax preparer which, in turn, ends up costing you more money.Instead, have a conversation with your CPA early in the year so you know what to look for when managing your taxes. In fact, if you haven’t already done so, you can use a freelance marketplace to find a local CPA to engage, or check Yelp for reviews on local firms and tax professionals who can get you started in the right direction.
However, if you just need a refresher to understand what types of tax deductions you can take, look at 99Deductions to get a breakdown of the items you can deduct for your type of work.
- Track Earnings, Expenses, and Taxes Automatically
Finally, be sure to create an automated process to track and manage your earnings, expenses, and taxes. Ramit Sethi, author of “I Will Teach You to Be Rich,” talks about this in-depth when he discusses building a bulletproof personal-finance system. If you have irregular income, as Sethi notes many freelancers do, you can still automate the management and savings of your freelancer finances—that way you know how much you’re really making and how much you should set aside for taxes.
As a 1099 recipient and freelancer, if you follow these three steps, you’ll quickly find that you’re spending less time dealing with your finances, putting you in a better position to make more money in 2016.
This story was submitted by Saja Ghanizada and does not constitute the views or opinions of Upwork. This article does not address all tax issues for freelancers, and it cannot and should not be relied upon as legal or tax advice. Readers are strongly encouraged to seek tax advice based on their particular circumstances from an independent tax advisor.