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At all stages in the freelancer’s career it is essential to manage finances to get the most out of self-employment. For people with creative leanings, finances and accounting may seem like daunting aspects of becoming one’s own boss. Below are simple steps, including useful applications and information resources, to help freelancers manage finances and increase profit and pleasure.

Step One: Keep Track of Your Time

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Time is money, so it’s one of the freelancer’s most valuable assets. Managing your time efficiently can make all the difference to your finances so it is essential to maintain control of work schedules. Harvest (www.getharvest.com) is a simple time-tracking and invoicing application that enables effective time management. The package allows users to quickly and intuitively track schedules, log expenses, run reports and bill clients.

Step Two: Manage Your Invoices

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It’s important to manage your invoices to make sure you get paid on time and that your finances are up to date. FreshBooks (www.freshbooks.com) is a great application for swiftly and simply sending, tracking and collecting payments. The package has features that can ease organisation of finances, make invoices look professional and enable tracking on the go with the connected iPhone app.

Step Three: Make the most of Online Banking

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Internet banking allows simple bank transfers, and it’s simple to check your bank accounts online to monitor income and outgoings. Anyone who has used eBay will be familiar with PayPal as a means to pay for goods, but it is also a useful tool to fall back on to receive online payments from clients. It’s also useful to have separate bank account for all your freelance finances, separate from your personal accounts, to maintain a boundary between business and leisure.

Step Four: Track Your Expenses

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It’s important to keep accurate records of all your expenditure throughout the financial year to ensure you don’t waste money unnecessarily. Wesabe (www.wesabe.com) is a great package for tracking expenditure, setting and checking targets, and graphically visualising spending. Importantly, Wesabe is a community-based application, so growing numbers of users can share financial tips and real-life experiences.

Step Five: Get Your Taxes Right

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If you are a freelancer working alone for a handful of clients the yearly tax return should be reasonably straight forward, and HMRC’s online self-assessment (www.hmrc.gov.uk) is a fairly intuitive way to file your tax return. If, however, you are outsourcing work, employing staff or renting workspace then taxes may become more complicated. The bigger your business, the more complex your tax issues are likely to be, so it might be necessary to get help of some sort. This could be in the form of software such as TurboTax (www.turbotax.intuit.com), an application for preparing tax returns ensuring you pay the correct amount. The package can be tailored to suit the nature and size of your business. It may also be necessary to employ the services of a professional accountant; if so make sure it is someone affordable within your budget and whom you can comfortably discuss your financial affairs.

Step Six: Get the Best Help

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When working as a freelancer it is important to acknowledge your capabilities and limitations, so if your finances are become difficult or you can’t unravel your accounts then it’s good to get help and advice. Aside from accountants, there are many other sources of financial information for freelancers including online advice from sites such as Freelance: UK (www.freelanceuk.com). If you run into difficulties with your finances, the Citizens Advice Bureau (www.citizensadvice.org.uk) offers free information and guidance services.

Step Seven: Enjoy the Freelancing Life

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There are many reasons to become a freelancer, but it is unlikely to be for the joys of managing your own accounts. The freedom to work independently shouldn’t get bogged down in troublesome financial difficulties. By managing your finances efficiently and seeking the right help when you need it, you can hopefully achieve the right balance and concentrate on the creative work that is at the center of the freelancing life.

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About the Author:
This guest post was written by Tom Walker who designs and blogs for a supplier of OfficeJet inks, toners and paper. You can read more of his work on the topics of print media, advertising and the arts on their blog.

18 Comments so far

  1. sriganesh says:

    you have very well explained the necessary steps tom, thanks for sharing. !
    .-= sriganesh´s last blog ..Uprinting Giveaway :500 Die Cut Business Cards for 2 winners =-.

  2. Bokka says:

    Great post…Useful and true…

  3. Mihai O. says:

    Another great article from creativeoverflow :)
    .-= Mihai O.´s last blog ..GIVEAWAY: 500 Business Cards from UPrinting.com =-.

  4. Keeping your taxes straight is really important. When you’re starting out, you should definitely hire an accountant for your first year, even if you plan to go it alone thereafter. Also, consider getting a bookkeeper as a cheaper alternative for routine financial administration.
    .-= Christopher Burd´s last blog ..The iPad, Part I: A post about Renaissance typography =-.

  5. Hey Tom, thanks for writing this up.

    It’s really nice to have a simple step-by-step list of priorities that deal with both the details and bigger picture – Have bookmarked and shared this, it’s great advice and is going to come in very handy over the coming year as I build towards becoming a full-time freelancer.

    Regards,
    Laneth Sffarlenn.
    .-= Laneth Sffarlenn´s last blog ..View Source – My best friend since 1997 =-.

  6. Hillary H. says:

    This is so useful! I’ve been looking for something like getharvest and freshbooks! Thank you.

  7. [...] Managing Your Finances as a Freelancer in 7 Simple Steps | Creativeoverflow At all stages in the freelancer’s career it is essential to manage finances to get the most out of self-employment. For people with creative leanings, finances and accounting may seem like daunting aspects of becoming one’s own boss. Below are simple steps, including useful applications and information resources, to help freelancers manage finances and increase profit and pleasure. [...]

  8. Lexi G says:

    Great steps, they are all key! This is really useful especially if you’ve just started to go the freelancer way. (I wish I found these when I first started!) I use FreshBooks for invoicing and have found it perfect for my needs. It actually integrates with the time tracking software i use, TSheets. (http://www.tsheets.com) Staying organized and up to date on everything is an integral part of being a freelancer, as well.

  9. step 7 if i may – would be to continuously think of ways when doing a job that would make it that bit easier and quicker when doing it next time…. and step 8 could be how to make networking fun for those not lucky enough to have the work come looking for them

  10. Thanks for nice information , I would like to bookmarking your site

  11. [...] 5. Managing Your Finances as a Freelancer in 7 Simple Steps [...]

  12. [...] 5. Managing Your Finances as a Freelancer in 7 Simple Steps [...]

  13. Marketing says:

    good news

  14. I believe tracking the process and time will lead to success in all business, irrespective of its nature.

  15. Melissa Evans says:

    Time tracking tools are very helpful for freelancers as they play a crucial role during payment collection. I totally rely upon Talygen for managing my multiple freelancing projects.

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