Keeping on Top of Finances When You Are Self-Employed
Being self-employed can bring about many positives to a person’s life. Freedom, flexibility, and autonomy are just a few of the reasons why someone might choose to make the leap into having their own small business, or to work as a sole trader. Despite such positives, there are added stresses that come with taking care of your own finances, especially if you are not an accountant.
Many people can find themselves behind on tax payments, unsure of their benefits, and struggling to put aside money for a pension. These negatives can sometimes negate the benefits, so it’s wise to keep on top of them to avoid any problems during your career.
Make a note of incoming payments
Whenever you get a payment from a client, whether it be by cash, bank transfer, or PayPal payment, it’s easy to sit there and think you will make a note of it later. If you have a select group of a few clients, you can sometimes get away with this mindset. However, when you rely on payments coming in from a lot of people, you will almost certainly lose track if you don’t record the details. The easiest way to keep a record is by having a spreadsheet that you can update every day, or a notebook to hand whenever a transaction takes place. If you get into the habit of doing this sooner, then you won’t have to worry about it later.
Pay your taxes on time
You would be surprised at how many people get caught up in running their business and forget to pay their taxes on time. Such practices can lead to interest building up, and legal issues arising if you haven’t paid them on time. In the rare chance that you must start paying taxes back in installments, it’s a good idea to follow a plan such as the IRS Fresh Start program, which will help you live your life sustainably, without worrying about taxes looming over your head as you pay them back bit by bit.
Keep receipts for business-related purchases
A lot of people who are self-employed pay for equipment such as laptops, software, and phone bills from their own pocket. If you are using these things primarily for business purposes, then you might not be aware that you can claim back money for these when you file a tax return. Business-related purchases can even include trips away if your income relies on you being a travel writer or international entrepreneur.
Hire an accountant
You might have nailed your business plan and have all other parts of your life on track, but numbers could be your weak spot. If you are confident that your money skills can ensure you pay the right taxes and still put enough aside for necessities, then you won’t have to worry. Yet if like most people you are scared you will put a foot wrong, it’s best to hire an accountant to help you organize your personal and business finances. It may seem like an arbitrary expense, but will help you immeasurably in the long run and take any stress off your shoulders.