Freelance work can be ideal for many of us. There’s so much more freedom than your standard nine to five employed role. You can work from home. You can choose who you work with. You choose your working schedule. You get to do as your please! But you will have to learn to manage your finances effectively. After all, full responsibility will fall on your shoulders! Here are just a few things you can do and skills you can pick up to ensure your finances are always in order!
Know How to Invoice Clients
First things first, it’s important that you know how to get paid for your work in the first place. When you freelance, you’re probably going to have to provide your client with an invoice that they can use to pay you. Your invoice will contain a lot of information that ensures you get paid properly, but try to keep it as clear and concise as possible. Avoid putting any unnecessary information.Your invoice should have your name or business name and details, the details of the person or company you’re invoicing, details of the work completed and a final sum that needs to be paid. You can see more about effective invoice management here.
Work Out Your Taxes
Remember that when you work as a self-employed individual, you don’t have an employer taking tax out of your wages or taking care of your tax on your behalf. Instead, the responsibility falls entirely on your shoulders. You’re going to have to start handling your taxes independently. Work out what tax you owe from each completed project and put the money aside in a dedicated tax account as you go along. This will remove the need to get a whole lot of money together when you file your self-assessment.
Hire an Accountant
Of course, this can be confusing and complex, especially if numbers aren’t your strong point or you’re inexperienced with calculating your taxes. You might also find that you don’t have time to sort your taxes out if you’re busy or stacked with work. A good solution for this is to hire an accountant or use a freelance accountant. They’ll be able to deal with your tax and make sure you’re paying the right amount on time.
When you are self-employed, you don’t get perks associated with employed life, such as paid annual leave, paid sick leave, or paid parental leave. This is why it’s important that you save. You need to save in order to always have money to fall back on when times are hard or if you want to take a break for any reason. This will ensure that you never get into a bad financial situation where you may fall into debt. Try to put money aside from each project you work on to ensure you have a little something stored away for a rainy day!
As you can see, you’ll have to focus on plenty of different areas when you move into a freelance role to maintain and manage your finances. Hopefully, the above advice will help you to achieve this!