5 Accounting Tips for Freelance Designers
Being a freelancer can be good for so many reasons, some of the major ones being:
- You work whenever you want
- You determine whom to work for
- You determine how much you make
- You can outsource part of your work and increase your earnings
While the above are some very attractive benefits, and reasons for almost any designer to want to be a freelancer, you should also realize that there are some harsh realities to being a freelance designer.
All the benefits that come with being a freelancer have a counter benefit, and you won’t be able to move far unless you can overcome these benefits. For example, there are a lot of great freelance designers that have a lot of clients, that make a lot of money, but hardly make anything tangible out of it; they just don’t know where the funds is going.
The worst case scenario is when the time comes for taxes. As someone who runs a CPA study website, I’ve always paid extra attention to accounting. If you’ve ever found it difficult to keep track of your finances as a freelance designer, or if you make a lot of money but don’t know where it is going this article will be giving you 5 accounting tips that can help you take control of your financial life.
Tip #1: Separate Your Personal Bank Account from Your Professional Bank Account
I’ve made this mistake myself, and I can tell you how dangerous it is. As a freelancer there are probably a million things you want to do, and it can sometimes be very difficult to differentiate what is a priority from what is not. You have to realize that the amount you have in your account can influence your stability and decisions as a freelancer, so make sure you always have enough money to sustain yourself; one great way to make sure of this is to keep different accounts.
Create a budget every month, and work out a percentage of your income that will be personal; if 60% of your income will go to your personal account, then let it go instead of having to spend 90% of your income on personal purposes without knowing it. Having different bank accounts for different purposes isn’t effective unless you stick to your decision, so make sure you only use your personal account for personal purposes, and your professional account for professional purposes.
Tip #2: Utilize an Invoicing System to Keep Track of Your Income
As a professional, do you know the worst thing that can happen to you at the end of a particular year? It is not knowing how much you’ve earned! This problem might look simple at first, but when you take a look at it beyond the surface, you will notice how dangerous it can be. For example, at the end of the year you have to pay taxes. You have to check your finances to compare your spending with your earnings, and you have to take a look to see if you need to increase your hourly rate.
All these things can’t be easily guessed, and it is often easy to think you’re winning when you’re losing; the only solution to this kind of problem is to keep track of your finances. Some people do this manually, and some do it through a freelance platform, but you have to be prepared in the case that something happens to your computer. The best alternative in a case like this is to have an invoicing system. There are a lot of invoicing platforms you can use online, but my recommendation is Freshbooks.