Having worked as a freelancer for some time now, I know how difficult it can be to manage time efficiently so that the deadlines have been met as agreed with clients – not to mention the importance of staying on top of bookkeeping.
Some freelancers prefer to hire an accountant to submit all the VAT returns, process wages, invoices, etc. others prefer to do this on their own. The later applies to me, the main reason is to know exactly how the business is performing, what payments are coming in on monthly basis, if there are any debtors, etc.
One of the tools I use regularly is Xero, I would highly recommend them as their online software ticks all the boxes for me. I believe that a successful businessman needs to understand accounting, keeping the cashflow in the business, knowing how the business performs at any given time is crucial to be successful.
The main concern for me as a freelancer is getting paid – Xero offers a great variety of ways to find out if there are any debtors, the great thing is that this can be done anywhere in the world, everything is in the cloud! Well, not literally, whether one prefers accessing the company details via an app or through a website, both offer all the necessary data. What’s best is that it is even possible to issue invoices on the go, these are then sent out to the client automatically with a click of a button – it really is that easy.
Here is some advice I would give to any freelancers who are about to start:
- Organise your books in a meaningful way so that it is always easy to find what your are looking for, whether it is a VAT return or an invoice
- Begin straight away, don’t put it off as you might find it really difficult to remember what each transaction in your bank account is for
- Talk to a bookkeeper and try and establish a business relationship, whether you trade skills or simply pay them for their support, it is important to have everything in order
- Keep records on how much time you dedicate to each client, what work has been carried out and whether you have charged them for your services, if so, how much
- Start using a meaningful software, preferably the one which allows you to stay on top of your finances no matter where you are, e.g. Xero 😉
- Offset your expenses against tax – travel expenses, office rent, power and utility bills, internet/phone bills,
capital expenditure – anything that you use to run your business on daily basis
- Produce reports to see how the business is performing regularly
These are just the few and they vary depending on the type of industry you operate in. I can’t encourage strong enough anyone who is considering giving up their boring full time job to make the first step and start their own business.
Last but not least, take care of your bookkeeping, with the right software it will be really easy and enjoyable at the same time!