One in five self-employed people have come close to being driven out of business due to the pressures of excessive finance admin. The shocking statistic was revealed in a survey by Intuit QuickBooks, which also found that the average self-employed person spends the equivalent of 15 working days unpicking their personal income from their business takings. As such, we thought it was high time to offer some tips on how to get your finance admin under control, so that you can spend more time enjoying freelancing.
The Intuit QuickBooks survey found that 75% of self-employed people use just one bank account for their personal and business use. This is a key reason why financial admin can become so complicated for freelancers.
Whether you work in professional translation or another field, setting up a new bank account is quick and easy, so if you’re currently routing all your finances through one account, it could be time to pop into your local branch and open a separate account that’s dedicated solely to your business transactions. When it comes to filling out tax returns and other paperwork, you’ll be glad you did.
On the subject of tax returns, be sure to keep a schedule of what you have to submit and by when. It doesn’t matter whether you set it as a reminder in Outlook, write it in your pocket diary or stick a post-it note on your wall – just be sure to note down your filing dates somewhere. Doing so will ensure that you can start completing your tax returns (and other necessary paperwork) in plenty of time, thus avoiding any last minute panics. This will also help you to avoid any missed submission deadlines and the resulting fines.
Given how few of us enjoy completing tax returns (after all, you put in hours of effort and the result is that you get sent a big bill), it’s also a good idea to keep a reward in mind for once you’ve finished. Whether it’s a box of chocolates, dinner out with friends or a pampering session at your local salon, mark the occasion appropriately. Having a treat lined up will help motivate you to plough through the paperwork in good time.
You can tackle invoices in several ways and how you do so will largely be driven by how many you need to issue. If you take on long projects and thus only issue a couple of invoices per year, using a pre-set template in your word processor will probably be sufficient. However, if you’re issuing several invoices per month, then a dedicated invoicing program can vastly reduce the time you spend on this aspect of your financial admin. What’s more, such software can often take care of automatically adding sales tax to invoices and flagging up the point at which bills become overdue.
Receipts can be a real pain for freelancers who have an expenses system in place. It’s all too tempting to simply throw them into a drawer and deal with them once a year. However, doing so inevitably leads to a few unpleasant hours spent sorting everything into date order when you finally need to claim your expenses. Instead, simply use an envelope for each month of the year and always put your receipts in with the newest at the back. That way, you’ll finish the year with everything in perfect order and save yourself the hassle of having to sort it out. This system can also make it much easier should you need to find a particular receipt at any point.
If you’re really feeling the strain of financial admin, remember that you’re not alone. It’s an issue that freelancers around the world struggle with and there are many accountants who specialise in supporting the self-employed to manage their financial paperwork through relatively low-cost services.
If you’re reluctant to commit to the expense of hiring an accountant, sit down and work out how many hours each month/year you spend on financial admin that could be completed by a professional. Then imagine that you could free up those hours to spend on client work instead. The additional income should certainly go some way towards covering the cost of the accountant!
How much time do you lose each month to finance admin? Does it fill you with dread or do you simply plough on with it as just another part of the freelancing lifestyle? Share your thoughts via the comments.