This post may contain affiliate links, allowing us to earn a commission on the products we would recommend to our families and closest friends. You can find more info on our Legal Stuff page.
One of the hardest but most liberating things you can do as an employee is to switch off from being an employee and start freelancing. Being able to do what you do on your own time, at your own pace, and for the money and the rate that you set is hugely liberating and can make you feel freer than anything else. However, it doesn’t come without stress. Freelancing is great and everything, but unless you can keep track of your budget and you can make sure you constantly have contracts coming in, you’re going to struggle with making sure that you make ends meet.
Most freelancers work for more than one employer and they have more than one client at once. The reason for this is that they want to have that guaranteed income coming in. If what you are doing could stand you in great stead and earn you a lot of money, then you should be just fine. But what are you going to do elsewhere? If projects are frequently taking a lot longer than you anticipated to complete, then payment can take weeks.
Before you become a freelancer and even start worrying about rates and cash you also have to think about contacting the EIN application service to get registered legitimately as a business owner. Your freelancing adventure can only go up from there! So with this in mind, let’s take a look at how you can budget better as a freelancer.
Look at your income and your expenses.
When it comes to your budget, you need to appreciate the fact that you have to. Be consistent with your income. What did your income and expenses look like in the last year, expenses especially? If you know what this looks like, you can estimate how many contracts you need to fulfill to be able to meet your financial obligations. Evaluating your bills and predicting your monthly and annual expenses can really help you to determine how much work you need to be doing and even what your rate would be. Once you have an idea of what your budget should look like, you will be able to put that out there into the world and start going for the right contract.
Keep your business money and your personal money separate.
It can be very tempting to mix the two together in one account, but when you do this, you’re going to end up. Finding it confusing to manage your business expenses. As a freelancer, you might have to upgrade your equipment, especially if you’re doing something like photography. Now that you’re becoming a business owner, you should start acting like one. Small businesses would hopefully not just allow money to float around aimlessly, so you need to ensure that you’re on top of it.
Don’t forget your taxes.
More than anything else, the money that you earn as a freelancer needs to be divided appropriately so that you can pay your adequate amount of tax. Whatever you earn from a freelance contractor, put 30% of it towards your taxes. If you do this throughout the year, then when it comes to tax season, you’ll be able to calculate your taxes effectively and ensure that you’re on top of it and that you don’t receive a giant bill.
Comments (0)