Freelancing is a great way to be your own boss and enjoy more freedom when it comes to your career. Regardless of whether you freelance as your only source of income or it’s your side hustle, you need to learn to manage your income.
Professionally managing your income will not only make your business feel more real, but it will save you a lot of hassle when it comes to your tax return. Learn more about how to manage your freelance income below.
Set Up a Separate Bank Account
Even if you’re only making a small amount of money online, you still need to declare it – which is why getting yourself a separate bank account for your income will really help you out when it comes to filing your returns. Set up an account which all your business transactions go through, that way your statements and transactions won’t get confused with your grocery shop or household bills.
Keep Aside Some Money for Axes
The one main thing you’ll want to avoid when working on a freelance basis is not having enough tax at the end of the year to cover your return. It’s worth reading up on how to do your taxes as a freelancer to help you learn how much you’re going to need to put aside each month. Generally, you should be aiming for 25-30 percent to make sure you’ve covered everything, and that money can sit in your business bank account or put into a separate savings account.
Pay Yourself a Salary
Paying yourself a salary is an effective way of making your business look and feel more professional, while also helping you to develop some better money habits as a freelancer. Simply work out how much of a salary to pay yourself and use a pay stub generator to create the relevant document – something that will make it easier to keep track of your income. You can make a simple bank transfer into your personal account to help ensure that all of your money is kept separate.
Learn to Track Your Expenses
The great news when working as a freelancer is that you can file many of your expenses as tax deductible, so make sure you hold onto those receipts. You should get into the habit of recording your expenses regularly, be it food, entertainment, or even online trading, whether on a spreadsheet or using online accounting tools, as this can help you save a lot of time at the end of the year. Your record-keeping doesn’t have to be anything complicated, so long as you keep all of the information and receipts in a safe and organized place.
Freelancing is a great way to use your skills to work for yourself and help you enjoy a great work/life balance. If you’re interested in getting into freelancing, or you’re a freelancer looking to boost your income, check out these top freelancing job sites to help you find work.