There are benefits and negatives that come with being a freelancer. The flexibility of working your own hours and managing your own time provides a great work-life balance. On the other hand, work isn’t always available so there’s the risk of unpredictable income and digging a hole filled with debt. Unlike working full-time where your income is consistent and easily managed, freelancing is the complete opposite. If you’re struggling keeping finances in order, here are a few tips that are available so you can matter with the important aspects of your business.
Keep money available for taxes
The dreaded tax deadline is extremely stressful for anyone, and it’s no different for freelancers who need to pay them too. Unlike working under an employer where a budget is automatically set aside from your wage, taxes for a freelancer have to be calculated and paid manually. It’s complicated as freelancers would have to go off last year’s tax credits to make an educated guess of annual earnings they’ve received. It helps if freelancers are aware of the tax rules that are associated with doing their work.
Set rates that are as good as others
Freelancers have the benefit of controlling how much income they receive. It’s probably suggested that when you first start out you won’t have the privilege of starting off your prices extremely high, but as you gain more clients over time this will be possible. It’s good to research the going rate for the industry you specialise in as a freelancer. If you raise your rates you’ll be able to manage your finances far better instead of stretching to cope.
Acquire business insurance
Although as a small business you’re always looking to save expenses wherever you can, business insurance shouldn’t be an aspect that you should cut corners on. It’s important to cover yourself in case the worst possible scenario occurs. It’s not denying that you’re good at whatever you do, but nobody’s perfect and when accidents happen they can come with big payouts. The most common insurance policy that’s taken out by freelancers includes professional indemnity insurance which covers for professional negligence. There are many firms such as Caunce O’Hara who can provide this reassurance for freelancers.
Do you know how much you’re earning at the moment? Is there a seasonal period where you tend to earn more throughout the year? If you keep on top of how much income you receive it’s easier to manage your finances. Try to keep historical data of how you’re performing weekly, monthly and yearly. You’ll find it easier to understand in what periods you can spend less or more in. Having a separate business account for your work is always helpful too.
Keeping on top of your finances should be one of the main priorities as a freelancer. Although it may take more time and effort, effective management of your finances causes less stress and provides you the time to focus on the work that’s important.