With freelancing comes great freedom. You are in charge of your business and how much you earn. But with this enticing liberty comes other responsibilities, some of them tedious.
Just like in any business, freelancers need to manage their financial records for a variety of reasons, this is even more important for them since most freelancers run their entire business on their own. Without an organised record, your business is likely going to suffer financially and legally.
In this article, we look at bookkeeping for freelancers, what it really means and the best way to go about it. Read on!
Bookkeeping simply means the process of recording, organizing, and managing financial transactions for a business or individual. As a freelancer, bookkeeping involves tracking your income and expenses, creating and sending invoices, reconciling bank statements, and generating financial reports.
While the idea of bookkeeping alone could sound daunting to many freelancers, it is undeniably crucial to your business. And luckily, there are great tools that can aid you.
Proper bookkeeping helps freelancers stay on top of their game. When you know the exact state of your finances, how and where you need improvement, you enjoy benefits that include:
Freelancers who have a thorough understanding of their financial records are armed with more insight and can make better-informed business decisions and avoid costly mistakes. Accounting for freelancers involves tracking the impact of every business decision and how to improve the outcomes.
Doing the taxes can become a tedious activity. Especially for someone with poorly organised or non-existent bookkeeping. Bookkeeping enables you to sort and keep all important documents ready.
Through bookkeeping, you can better control how much you earn, when you get paid and what you spend with ease. Maintaining a balanced cash flow is crucial for staying afloat in your business.
By generating and sending out invoices promptly you can notify clients and get your payment when it is due. This entire process can be automated allowing you to focus on other important tasks.
For freelancers that need to acquire materials for their work, with properly sorted records it is easier to maintain a positive relationship with vendors. Bookkeeping can help you in allocating expenses and delivering payment promptly.
Maintaining a record of your financial transactions generally comes down to what works best for you. However, some tools can help you automate this tedious process and increase your productivity as a freelancer. You don't need to be an accounting guru to get your finances in order.
Below are tools every freelancer can use to maintain their finances:
Some popular examples of software that make accounting for freelancers an easy task are Quickbooks and Freshbooks.
Zoho Books is the soeftware that I use for bookkeeping.
Zoho Books is an excellent software that simplifies bookkeeping for small and medium-sized businesses. This cloud-based accounting software has several cool features that make it stand out from its competitors.
One of its most significant advantages is its user-friendly interface that allows freelancers and business owners to manage their finances with ease.
Additionally, Zoho Books offers comprehensive accounting features, including inventory management, invoicing, and financial reporting. The software's invoicing feature allows users to create and send professional invoices and receive online payments through various payment gateways.
Zoho Books also enables businesses to reconcile bank transactions and track expenses effortlessly. Furthermore, the software offers a mobile app that allows users to access their financial information on-the-go. These features make Zoho Books an ideal solution for businesses looking to streamline their accounting processes and manage their finances efficiently.
For a lot of freelancers with a vague idea of bookkeeping, how to carry out this function is a tough question. Below are proven steps that can help you bookkeep like a pro:
While bookkeeping also requires personal discipline on the freelancer's part, you can follow the general tips below to see more positive results from your tasks:
A bookkeeping strategy may include a clear-cut routine to follow and the use of specific bookkeeping tools. Once you develop a system that fits you best, it is important to stick to it consistently.
It is often tempting to handle personal and business finances together, but this can lead to confusion and mistakes in your bookkeeping. Keep track of them separately.
Receipts and invoices are important records for your business. Keep them organised and available for your bookkeeping sessions. With the aid of accounting software, it is easier to create and manage invoices.
Consistency is vital for the accurate representation and maintenance of your records. To continually manage your finances, schedule periodic bookkeeping sessions, e.g, weekly or monthly.
Sometimes your bookkeeping tasks may get out of hand due to the busy schedule running your freelance business requires. Outsourcing the management of your finances could be a more productive option.
With the focus on landing new gigs and delivering quality results, a lot of freelancers end up paying little attention to their finances. To run a successful business you must learn how to keep your finances in check. Through bookkeeping best practices, tips and tools shared in this article you can easily perform bookkeeping tasks while maintaining business growth.