Accounting for Freelancers and Solopreneurs

The dreaded “A” word!  Let’s face it, it is one of the hardest parts of being in business, but it is also the most important.  Keeping good accounting records is key to understanding if your business is making money, where it is making money and where more money should be invested.  With this in mind and with tax filing deadlines around the corner (see http://smallbizflo.blogspot.com/2015/11/tax-tips-for-small-business.html for tips on filing taxes), I wanted to provide 3 key things you can start doing today to make your accounting more manageable.

accounting

1. Store all your receipts/invoices in one file

With the proliferation of services that allow you to pay over the web, it is easier than ever to keep track of your receipts.  There is a high likelihood that many of the services and products you are buying for your business are web-based which means the company you are buying from will send you an “e-receipt”.  You know…those are the emails that confirm your purchase was complete.  Simply create a folder in your email box entitled “Receipts” and start moving emails into that folder as they come in.  You may even want to create sub-folders to delineate which receipts are for marketing, materials, etc to make your life and your accountants life a little easier at tax time.  The other benefit to this method is that it clears out your inbox.  Clearing out inboxes makes me super happy.

2. Budget for the long term

Obtaining an understanding of how much money is coming in and going out is paramount in running a successful business.  One of the intended benefits of this understanding is being able to plan ahead for large purchases and unintended expenses.  By creating budgets for 6 months intervals, it will save you time from dealing with this every month and instead you will just be responsible for tracking and making sure you income and spending are in line with your expectations.  Before long, you will be able to spit out your costs and income from memory and use your time to focus on longer term goals.

3. Put your accounting on a schedule

This doesn’t mean put your accounting off, but it does mean schedule a time to work on your accounting in your calendar, just as if you are meeting with a client.  In your business, there are probably things that you have to do on a regular basis, so just schedule.  The amount of time that you schedule is based on your type of business, but here are few examples.  If you are selling product everyday, you may want to take 30 minutes at the end of the day to send out invoices.  If it is services you sell, you may consider sending out invoices once a week and schedule an hour to do so.  Have alot of receipts, you may want to take 1 day each month to organize them.  The amount of time you schedule is up to you, but the key is to do it when you say you are.  It only takes doing something for 30 days to make it a habit, so get in the habit of understanding your numbers and your business will be better for it.

Once you have put all these things into practice, you will find that accounting is not as scary as it may seem.  However, if you need assistance incorporating these steps into your business or with filing your taxes, contact the experts at R.E. Clemons and Associates (www.reclemonsandassociates.com) at 773-783-4829 or rclemons@msn.com.

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