Working as a freelance creative can be a tough gig. If it's not juggling several tasks at once, it's chasing late invoices, frantically filing your tax return the night before the deadline or searching for that one missing receipt. Keeping on top of your accounting is a sure-fire way to remain organised, remain calm, and focus on what really matters to your creative endeavours.
Remove the hassle from your hustle with these seven accounting tips.
Separate your personal and professional finances
This is one of the most common freelancing mistakes. It’s easy to see the money come in, acknowledge its arrival, and leave the process at that. What’s important, however, is to initiate an accounting stage that happens on a regular and frequent basis. Not only will it make your bookkeeping a whole lot easier, but it will also give you a clear understanding of your business's financial situation.
Dedicate one day every two weeks say, to investigate your finances and cash flow. Look at your incomes: calculate what needs to be put aside for taxes, bills etc, what can be reinvested into your business, and what can be used as a fallback in case the work goes quiet, as it will. What is left after that is yours to use as you please, but until you take the time to thoroughly review your finances, the line between personal and professional will always be blurred.
Create a fall-back fund
There will always be hidden or unexpected costs that rear their head at the worst possible moment. Don’t be caught short. Every month, squirrel away a chunk of income as a cushion, so that when an unexpected bill arises, or your laptop gives up the ghost, you have an emergency fund in reserve that allows you to rectify the situation and get back to doing what you enjoy most.
Invoice early
Everybody wants to be paid for their work, and you’d be hard pushed to find a freelancer who’s happy to let this aspect slide. Ensuring that the money you’re owed reaches your bank account on time is the number one priority, so why is it that so many leave their invoicing until the last minute?
Keep clear and concise records of the time you spent on each task. Charge by the hour? Use a time tracking system like Toggl. Work on a retainer? Make sure you are familiar with your fees and expectations, so it’s a simple task when the time comes to invoice for your work. Staying on top of your invoicing and admin keeps cash flow steady, stress levels to a minimum, and clients aware of your personal way of working.
Don’t bury your head in the sand
The worst thing you can do for your business is to turn a blind eye to your finances. Not only could it cause you a major headache down the line, but you could also run into trouble with the law and ruin the reputation of a business you’ve worked so hard to build. To ensure compliance, educate yourself. There are plenty of readily available courses and resources online, many of which are free to access. And if in doubt, always seek advice from a specialist in the field.
Make new technology work for you
There are so many brilliant tools and services available to freelancers to help streamline the accounting process. We love using Coconut, a tax app for the self-employed, but there are plenty of other solutions out there also at your disposal. It’s all about shopping around, trialling these services and seeing what works for you. Online banks such as Tide, Starling and Revolut also make things nice and user-friendly. A feature we really like on Starling is their “Saving Spaces” where we can put aside money for payments such as our annual corporation tax bill or specific projects.
But it’s not just tech on the bookkeeping side of things. As previously mentioned, time tracking tools like Toggl can help you break down your day-to-day task lists and have billing functions so you can send out your invoices all from one place. Calendar apps can help you keep track and integrate all aspects of your workday, whether that’s meetings, focused project time, due bills, or even your mundane tasks. Technology is so readily available at our fingertips; you’d be silly not to take advantage of some of the handy tools right in front of you.
Organise your receipts
Every business will have outgoings, especially if you work from home in the current climate. But claiming VAT back on costs incurred from your daily operations is not a simple or straightforward process. There are rules, exceptions, schemes, and subsidies which all play a role in what you can and can’t claim back but keeping those receipts in an organised file can save you a major headache when completing your tax return. The golden rule to remember, however, is that you can only claim the VAT back on goods and services that have been purchased and used exclusively for business purposes. Don’t be caught out by the taxman.
Whether it's big or small, keep hold of those receipts - they all add up in the end.
Get a good accountant
Lastly, it should be said that you should only take on your own accounting if you’re confident in your ability. There’s no shame in asking for professional help – it doesn’t make you a bad business owner. Ultimately, whatever works for you is the best move for your business.
So, if you don’t have the time or mental strength to deal with all the paperwork, instructing an accountant may be the best way forward. Making sure you find one who suits your needs and understands your business clearly, however, is an important but often challenging task. At Two Suns, we’re always on hand to recommend excellent accountants to fellow creatives. Drop us an email at hello@twosuns.agency and we’ll put you in touch with the best in the business.
This article was first published on Two Suns Creative Agency in November of 2022
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