Bookkeeping may not be your favorite part of freelancing. But keeping track of your business finances is essential for various reasons. Accounting helps you manage your cash flow and pay the correct amount of tax at the right time. It also gives insight into how well your business is performing and where you can save money by cutting back on unnecessary expenses.
We dislike bookkeeping. Most of us would rather write than figure out which invoices we paid last month and what other expenses we can claim as tax-deductible.
If you’re struggling with keeping tabs on your freelancing finances, here are some strategies to help you take control of your bookkeeping.
Organize your financial records
Well-organized files are a great way to have better control of your bookkeeping. When you can easily retrieve files, it’s easier to record income and expenses correctly. Begin by creating a simple filing system. Keep paper and electronic copies of receipts, bank statements, credit card statements, and other documents safe. Once you’ve taken these steps, you’ll be surprised at how much more efficient and less cumbersome your bookkeeping can be.
Write a checklist of your bookkeeping tasks
List the tasks that you regularly perform to manage your accounting. These tasks include entering transactions, preparing invoices and receipts, scanning documents, and more. Having this checklist will help you stay organized and on track. When you write out all of your tasks, you’ll be able to tick off each one as it’s complete. It also eliminates errors in the process. The key is to build an approach that works for you.
Use software and automation tools
In addition to efficient filing and task checklists, software and automation are valuable in keeping your books in order. Applications like spreadsheets, accounting software, and tax filing services save time and get things done faster. There are many different options available, so start by trying them out. Whatever apps or tools you choose, ensure they fit your needs and workflow.
Keep track of invoices and payments
Tracking invoices and payments are vital to your success. It will help you stay organized and give you greater visibility into your finances and a better sense of how your business is doing. Record all payments made throughout the year using a spreadsheet or accounting software. Use your smartphone to send reminders about upcoming bills. You can avoid payment issues and keep your freelancing business running smoothly by monitoring your cash flow.
Work with a licensed accountant
While it’s true that many people have the skills and abilities to work as a bookkeeper, you should never work without an accountant. A certified public accountant can better understand your financial situation, help you stick to your budget, and determine the tax implications you need to consider.
Bookkeeping is not just about tracking receipts and expenses. It’s also about monitoring how much cash your business brings in and makes. The best bookkeepers develop the most efficient ways to track and manage cash flow. Even though you may not be a natural bookkeeper, you can still learn the fundamentals of bookkeeping and improve. Start by creating a workflow that works for you. Once you’ve established the basics, you can build on your knowledge as you master more advanced accounting techniques.