Important Accounting Basics for Freelancers
You’ve decided to start your own business - now what? Even if your only employee is yourself, there is still a lot of financial tracking that goes on in a business. It doesn’t have to be scary, and preparation is the biggest key to success.
Here are a few tips and tricks that help entrepreneurs get started in the world of finances:
Keep those papers
You may be used to tossing that Walmart receipt but when you’re conducting business transactions, business owners must keep all paper with any kind of purchase or payment. Though you can track your finances through apps and bank statements, keeping your receipts neatly filed helps you double-check and verify the purchases when tax season comes around.
You can also scan these documents as a valid form for the IRS or other business functions. You can upload these files straight to your bookkeeping software and email it to your accountant or bookkeeper. It’s also recommended to have your digital receipts emailed to a separate business email for easy access.
Organize your finances digitally
There is a plethora of accounting and bookkeeping software out there for newbies. When you have only a small collection of expenses, going for a free platform may be the best way to go.
However, when you start to get into more complex transactions, you may want to consider an accounting software like QuickBooks to lay out your finances. Many accountants and bookkeepers are certified in QuickBooks and can offer services to help you prepare financial documents and file taxes.
Set aside your taxes as you go
As a freelancer, your income is not automatically taxed by a payroll, and you’ll soon find out it is a much bigger pain to wait and pay later.
To be safe, it is recommended to take 25-30% of your income and put it away to an untouchable tax account. Quarterly taxes are also something to watch out for, so plan accordingly with those savings accounts. Check your local and state taxes to be extra thorough on the required taxation.
Hire a bookkeeper
Once you achieve a certain level of growth in your business, you may find that your time and patience for tracking finances begin to dwindle. Or you may simply just need an expert to do things the right way.
Hiring a bookkeeper is the perfect solution for early entrepreneurs. Though hiring an entire financial team may not be the wise choice for your company right now, a bookkeeper is perfect for keeping your books in check and preparing finances for tax season. Infinity Bookkeepers has a variety of services and packages depending on your needs.
Keep your business finances separate
If you are just starting, you pour a lot of your own money into your business, but it is important to keep company and personal transactions separate. If you have not yet opened a business bank account, go to your bank today. Mixing expenses doesn’t seem like a big deal now, but when tax season comes around you will have a big mess on your hands.
Starting to freelance is an exciting time and while it can be overwhelming, your finances don’t need to be. Let Infinity Bookkeepers help you keep your accounting on track so you can focus on what you do best.