7 Simple Tips to Manage Freelance Business Expenses
Contrary to popular belief, freelancers incur almost as many business expenses as a normal full-time businessperson would. Undeniably, these expenses might be considerably reduced due to the flexibility of freelance jobs. For instance, most freelancers work from the comfort of their homes. In such cases, the freelance office expense is significantly lower. However, the freelance business is a work with an irregular income. Sometimes, you might be earning well. At other times, you may find yourself struggling with your finances by the end of the month. Moreover, without proper management of their time and earnings, many freelancers end up incurring more business costs than acceptable. There are a few simple tips to reduce freelance business expenses.
1. Keep Records through a Freelance Expenses Spreadsheet
Recording expenses, as well as income, is extremely important in the freelance business. More important is the way in which you keep records of these. Freelance expenses spreadsheet turns out to be a good manner to store such vital business information. By being able to go back over your records as and when you need them, you can save yourself considerable expenses. It also allows you to have a reality check on your financial situation.[sociallocker id=2937]
2. Freelance Expense Tracker
Freelance expense tracking is an important step in the freelance business. It is easy to get tempted into withdrawing money for a few less important expenses, such as buying a new shirt or treating yourself for a spa session. However, these seemingly small expenses add up quickly. If you do not use an expense tracker, you might not notice it until it is too late. There are freelance expense tracker apps available for free on the web.
3. Be Realistic About Your Income and Expenses
A freelancer might not have freelance office expense, but there are still personal and business expenses to be met. In order to effectively bear these expenses, a freelancer has to be realistic about his income. There are two ways to project the monthly income and expenses. For an experienced freelancer, he may consider his annual income or expense and divide that number by twelve. For newer freelancers, they may consider the dad available and work with that.
4. Milestone Payments Provide More Guarantee
Setting milestone payments guarantees that money keeps flowing on a regular basis. Normally, freelancers get paid on completion of a project. However, when handling bigger projects, the freelancer can schedule a payment at a set interval. Of course, the client needs to be agreeable to this method of working. Partial payments, however, keep the freelancer afloat in case of any unexpected expenses incurred for a project.
5. Record Business Expenses for Any Meals or Drinks
In some countries, the government offers deductions on meals and drinks. If you are a freelancer in one of these countries and you have to meet people for business purposes, it is always a good idea to keep track of the meals and drinks expenses. A simple record of the purpose of the meeting, the people you met with and the topic of the discussion is usually enough.
6. Hiring Someone Can Help Reduce Expenses
Although it seems to be a confusing statement, hiring outside help even in a freelance business is a good option. Freelance business expenses can be quite complicated. Unless you have knowledge about accounting, it is easy to get overwhelmed by the recording and processing of expenses. Instead of making a financial blunder that can cost you more in the long run, it is safer to hire an accountant or a bookkeeper.
7. Keep Personal and Business Accounts Separate
Freelancers often tend to use the same account for business and personal use. Although this is a perfectly legal option, it might not be a good financial option. In order to create a budget that is viable, it is important to separate these two accounts. It helps a great deal when the tax season is around the corner. Your accountant can better assess tax deductibles, without missing out on any important details. It can also spare you unnecessary additional expenses.
These tips can help in reducing freelance business expenses. However, the savings you are able to make will depend on your actual expenses and the way you handle your income. Although freelancing is flexible in terms of working hours, the freelancer still needs to do the job to get paid. Getting the work done involved certain costs. By implementing the tips provided, these costs, as well other expenses, might be considerably reduced.[/sociallocker]
Don’t have a Truelancer Account yet? Signup on Truelancer today.
Head of Product – Truelancer Prime
Technopreneur – Startup Evangelist – Food Hobbyist and a Writer.