The Twenty SS20 Issue

7 ways…

By Jo Phillips

7 Essential Finance Tips for Freelancers

A freelancing career is an extremely attractive option for many people out there. It puts you in the driver’s seat of your career path, allowing you to choose the route, the clients, and just how successful you will be in your ventures. With that said, it’s not always the easiest path; in fact, there can be an awful lot of obstacles and challenges to overcome. One of the biggest by far is financial issues that you can encounter. Starting up your own business isn’t cheap, and then keeping it afloat is a whole other beast.

To help get you through those rough financial patches, here are some tips that you can use. With that in mind, here’s a look at seven essential finance tips meant specifically for freelancers such as yourself.

Plan for Good Times and Rough Times

While it’s great to go into your freelancing career with big dreams and a positive outlook, you also need to be realistic. Just like with any business, there will be the good times where you are swamped and making good money, and then there will be lulls where you need to really buckle down and find a way through the rough patch.

Going in with a realistic mindset is only half the battle, though, as you need to have a plan in place for all scenarios. This plan will act as your blueprint, helping you to navigate no matter what the business is experiencing.

Look for Ways to Streamline Processes

The first tip is to look for ways that can streamline processes, cutting out unnecessary steps. These extra steps can end up wasting a whole lot of time, cause errors, and just slow down your progress in terms of your freelancing.

So, what are examples of streamlining a process? Billing is a great example. If you can use software that makes billing/invoicing your clients simple, fast, and automated, then you’ll be able to focus on your work instead and know the invoice has been sent out on time.

Speak to a Financial Broker

Before you go applying for any type of business loan or line of credit, it can be well worth your time to get professional advice from a financial broker. Take, for example, New Horizons, which is a fully authorised and regulated credit broker that works with a huge panel of lenders. They can help advise you on the best ways to get out of debt, what sort of financial options would be available to you, and what to expect in the process and the fact that even with poor credit, you can still find a lender willing to work with you.

If you’re in debt, this information may help, as New Horizons has featured a blog that looks at the best ways to get out of debt.

Look into How You Want to Operate – a Limited Company or Sole Trader

Here in the UK, you’ve got the option of operating either as a limited company or a sole trader as a self-employed person. If you choose the route of a limited company, it means that the company is a separate legal entity, and there is no personal liability. If you decide a sole trader works best for you, keep in mind there is no legal separation between the business and you. What this means is that you’re personally responsible and liable for the business debts and activities.

Keep Separate Accounts

Experts also advise freelancers to keep separate bank accounts when it comes to your personal bank account and the business bank account. While it’s not required that you have separate accounts if your business is a sole trader operation, it’s still advisable.

Make Sure You’re Budgeting for Taxes

One of the biggest hits you’ll take as a freelancer is taxes. Come tax season, it’s time to figure out what you owe, and if you aren’t prepared, then it’s going to be a very stressful time. It could be wise to work with an accountant throughout the year who can advise you and help you plan accordingly.

Keep Spending in Check

Here’s a tip that can apply to any business, freelancing or not. It’s imperative to keep careful track of expenses all year long by using a carefully planned budget. This is obviously important from a budgeting standpoint, but it can also help you to identify areas where cuts could be made. As a freelancer, you’re going to have to get really good at tracking everything. Not to worry, as there is software that will assist in tracking and make the task easy and fast.

Ensuring Your Business Has All That It Needs to Succeed Financially

By using all of these tips in conjunction with one another, you’ll be making sure you cover all the bases and that you’re setting your freelancing company up for financial success.