As a freelancer there are probably a million and one things you have to think about amiright? Job might be a good’un, but there is no such thing as finishing your 9-5 and calling it a day. The health of your business requires you to put in the extra hours and often make sacrifices in order to lead the life you want to live.
While it might not be all sunshine and rainbows, the satisfaction of building your own business up, and seeing the hours of labour translate into something you can be proud of is certainly worth it.
Setting yourself up for success means more than having a solid business plan, or having the right work ethic and dedication to your service or business. It also means being careful, very careful, when it comes to the way you manage your finances.
The three types of insurance:
There are three main types of insurance for self-employed people:
- Public liability insurance
- Professional Indemnity Insurance
- Employees liability insurance
Public Liability insurance protects you if someone gets injured/ their property gets damaged while working for you or you are deemed to be responsible. It’s worth knowing that some contracts with clients will specify that a business they work with must have public liability insurance. Professional Indemnity insurance is a whole other kettle of fish, and will provide cover should you be accused of providing inadequate services/advice to a client. This insurance covers a wide range of scenarios from loss of goods or money, to unintentional breach of copyright. The third type of insurance you might need is Employees Liability insurance. This is a legal requirement if your business employs one or more people and essentially covers you and your business if your employees are ill or injured at work.
If you don’t have your business budget in check then it’s high time you do so. First things first, get yourself a dedicated bank account for your business. There’s nothing worse than managing several accounts for different jobs/services and having to try to make sense of your accounting at the end of the quarter. Decide on an accounting system that works for you and make sure you (or a dedicated person on your team) track your revenue, costs, and itemise your assets in any colourful spreadsheet table that suits you.
Set aside a sum each month for tax
It’s not likely that you’ll forget to set aside a percentage of your income for the tax man at the end of the year, but do make sure you are aware of the tax bracket you fall into and set aside a sum accordingly, staying mindful of the tax deadlines you need to meet.
Get yourself an accountant
Navigating the ins and outs of the IRS can be a tricky business. Having a dedicated accountant to help you do this can make life so much easier. Apart from avoiding the painstaking process of filing your tax returns, they can help you find ways to save money as a business owner.
Keep your receipts!
This is pretty basic, but having an organised recording system in place for your receipts can save you so much hassle when it comes to your bookkeeping. Consider investing in reliable accounting software to help you keep track of your bookkeeping. Cloud-based accounting software such as Xero will help you manage your numbers, while Receipt Bank is a great little resource that grabs snapshots of your receipts and invoices, categorising them quickly and efficiently.
And save a little more…
It never hurts to have a little extra put aside for any unexpected costs that might come up. Particularly when you are a new business and still finding your feet. After the initial start-up costs of launching your business, the other costs such as insurance, legal fees and taxes will also need to be met. The little costs that really add up might be administrative costs (laptops,phones,office supplies) or employee expenses depending on the nature of your business.