If you want to start a successful freelance career, one of the biggest barriers is handling your income. According to a TD Bank survey, almost half of 508 respondents admitted that bookkeeping is their least favorite task. However, it’s important to remember that bookkeeping isn’t as scary as it seems.
Once you know a few fundamentals, you can tackle one of the hardest parts about freelancing for an easier time all around. Read on for our quick freelancing bookkeeping 101 guide on how to get started!
Once you know the importance of freelance bookkeeping, you’ll be far more motivated to keep up with it going forward. Simply put, bookkeeping enables you to keep track of your money so you can make better financial decisions. If you have a smooth and seamless process, you’ll enjoy:
- More peace of mind and confidence in your choices
- Better records for your tax return
- Ability to show value to investors
- Better decision-making about startup loans
Don’t start bookkeeping because you know you “should”–do it because you know it provides these benefits and more.
Now that you know why bookkeeping is so helpful, you’ll want to consider the kinds of records you need to keep track of. A simple rule of thumb is to keep track of all income and expenses that have to do with your business. The more detailed you are, the better.
Consider future-you and all the detail you can include about payments and transactions that would make your life easier, such as:
- Who you received the money from
- The date
- The amount of money
- The purpose
In only a glance, you should be able to receive all the information you need without having to dig deeper. You’ll want the same amount of detail for expenses.
One of the hardest decisions you’ll make is how to keep all the information organized. However, the easiest place to start is to consider your own experience. For instance, if you’ve been creating Excel spreadsheets for other areas of your life or your current full-time job, consider creating a spreadsheet for your freelance bookkeeping.
You can also use software and apps such as:
- QuickBooks Self-Employed
- Zoho Books
Many of these apps come with free trials, so take your time and commit to the one that feels right for you.
The second hardest part of bookkeeping is staying on track, as your records are only helpful if you’re ensuring that all your income and expenses are tracked. This is why finding a system that works for you is so important, as you’ll be able to create a sustainable habit of keeping track of all your records.
In the United States, the IRS recommends for you to keep records for three to seven years depending on your situation.
Our freelance bookkeeping 101 guide should show you that bookkeeping isn’t as scary and overwhelming as it first appears to be. In fact, with a good system in place, you’ll benefit from less stress and a renewed confidence in your skill and success as a freelancer. These aren’t qualities that are easy to come by!
Ready to kickstart your freelance career the right way? Apply to join the School for Startups today!