Here are some ways to help you have a better handle on your money, so you’re better prepared if your income slows.
1) Keep things separate
Putting your freelance income into your personal bank account isn’t always a good idea. It’s harder to track your financial success and locate business-related expenses. And makes things tricky at tax-time.
Consider opening a transaction and savings account that you only use for your freelance business. It’s a great first step in putting a record-keeping strategy in place. It can also make things easier for you when you decide to separate your business and personal finances in the future.
2) Pay super
Being self-employed means you don’t have to make contributions to a super fund – but it’s wise to think long term, especially when it comes to retirement. If you make personal super contributions during the financial year, you may be entitled to super co-contributions from the government. And it’s likely you’ll be able to claim tax back too.
3) Plan for tax-time
The end of the financial year (EOFY) means tackling your tax return. For freelancers, especially first-timers, tax time can feel overwhelming, but it doesn’t have to be. We’ve compiled 7 tax time tips to help you out.
4) Get covered
Freelancing gives you independence, but means you’re no longer covered for things like sick leave. Planning for the unexpected is important but often overlooked. Income protection insurance can cover you for illness or injury that stops you earning an income. It may pay up to 75% of your regular income, come with optional extras like rehabilitation cover and the premiums are generally tax deductible. Getting insurance is a cost but ask yourself a serious question, can you afford not to have it?
5) Consider all your costs
Depending on your freelance work, you may need to set up a home office, buy work-related equipment, use your own vehicle, phone or home internet access. Work out all your costs then factor them in to what you charge. One of the biggest mistakes freelancers make is to undercharge for their time, leaving them unable to cover their costs.
6) Seek out experts
It’s such a waste of time - your billable time - to be upskilling yourself on things that you could easily outsource. Create a list of go-to people and call them when you need help with tasks you’re not experienced in. Paying an accountant or a tax expert for example could actually help you save (or claim back) money.
7) Have a contingency plan
Keep some money aside during the good times. So if your freelance income slows down, you don’t have to worry about things like paying bills.