Bookkeeping for Freelancers: Everything You Need to Know

Source: PC Mag

Bookkeeping can be a huge challenge for freelancers, sole proprietors, and contractors from all categories. Most start their business endeavours without having a clue about how to take care of the bookkeeping and accounting tasks or what kind of toolset they need to make their lives easier. If that’s your case, a bookkeeping and accounting basic guide is essential, and here is everything you need to know about the most important tips and resources to organize your finances for good. One more thing, in case you don’t want to create endless Excel spreadsheets or to spend countless hours doing things manually, all tips and resources listed here can be easily found in free accounting and bookkeeping software, so enjoy!

Manage Your Bills

Source: VentureBeat

Having control of what bills to pay and when to pay them is as important as knowing how much you’re getting paid. Every time you receive a new bill, simply include it into your account with all relevant details such as dates, amount, vendor, product, and quantity, and you’ll see your numbers improving in no time. Sync all the information you input with your entire account finances so you can track down every penny that’s coming in and out of your account.

Track Expenses

Source: TechCrunch

Track your personal and business expenses by recording all your purchases. These expenses can be categorized in a number of pre-set categories or in custom ones. Each transaction can be entered manually or through automated receipt data entry tools. Attach source documents for each expense you have and to each transaction you want. Mark the pertinent expenses as billable to your customers so you can protect your margins and add them to your next invoice.

Evaluate Financial Reports

Source: TechRadar

A crucial aspect for every freelancer is to be able to measure, track and access all information related to business finances in order to make well-informed decisions, and the best way to do that is through insightful financial reports. Evaluate your financial reports to help you better visualize all the information you need to improve your business. There are several meaningful reports you can see, such as Aged Payable, Aged Receivable, Balance Sheet, General Ledger, Trial Balance, Journal Report, and many more. Close off your accounts at the end of each reporting period such as tax periods and financial year-end in precision, and even calculate your sales tax returns.

Send Online Invoices

Source: SlickPie Software

Online Invoicing is one of the most essential features for any freelancer. You can choose between sending an invoice based in a pre-set theme or you can fully customize the look and feel of your invoices to cause an even greater positive impact. You should set your invoices to be automatically sent at the most convenient time for you and for your client. It’s possible to track whenever your clients have viewed and paid your invoice, which is a major benefit since it ends the possibility of eventual “I’ve never got you invoice” claims, and will ultimately make you get paid faster. You can also set up recurring invoices, which means that at a stipulated date the same invoice will be sent to the same client under the same conditions automatically. This is a huge time-saving tool for freelancers that have steady clients and service same orders month to month. This step is so fast and effortless that it encourages clients even more to make a payment against the invoice faster and clear it out. You can also handle returns and apply credits to existing invoices, or simply add a credit note to it so you can apply later. Next time you invoice the customer, you will be automatically reminded of any outstanding credits. Bulk send invoices and statements to all your customers in one go, and set expected payment dates to help manage cash flow.

Send Payment Reminders

Source: Business Insider

One of the best ways for you to get paid faster is by setting up late payment reminders for both due and overdue payment to be sent to your clients. Many freelancers don’t get paid in time just because their clients were too busy focusing on other subjects rather than the upcoming bills dates. These reminders end up putting more money into your pockets with little or no effort from your part.

Accept PayPal, Stripe, and Credit Card Payments

Source: Forbes

Whenever you send an invoice to your customers they can pay you in many different instantaneous and convenient ways. They should be able to choose to pay your invoice through all the major credits cards on the market, such as Visa, MasterCard, and American Express, or they can also choose payment gateways like PayPal and Stripe. This means that you will be able to accept online payments in any way your customers prefer, so you won’t have to worry about being available 24/7 to collect payments since you will be able to get paid anywhere, at any time. Your customers will able to pay you with a single click of a button with no unnecessary efforts or headaches whatsoever. Implementing additional payment gateways plays a key role in reducing the barriers for you increase the chances of your customers paying you on time. This is one of the best ways to make your customers’ payment experience easier and more efficient.

Create Quotes and Estimates

Source: DailyTekk

Every freelancer knows the value that sending a quote or an estimate upfront can do when negotiating a contract. Doing this can significantly improve the rate of deals closed, and it’s possible to do it in a matter of seconds whenever you need. If your prospective customers are still unsure about closing the deal you can simply send them a quote containing the amount that they will be charge for each good or service your company is providing. You can send a complete outline of a sale, containing product name, product description, products price, and even taxes. In case your customers decide to close the deal, you can just change the status of the quote to invoice and you’ll be good to go. The sale will take place and your customers will be able to pay you right away. In case you can’t exactly precise each detail of the sale, you can also create estimates by inputting approximate prices or hours that will take for the order to be concluded. This is a handy resource for freelancers and it is also available following the same standards of quotes.

Reconcile Bank Transactions

Source: Huffington Post

Every freelancer must be able to have their books organized and matched with their bank accounts. This task can be complicated and often easier to say than to do, but in good accounting software you can do your bank reconciliations in no time. You can import data from your bank accounts, credit cards, Stripe, and PayPal transactions to make sure your business books and accounts are always synchronized and up-to-date. Get live bank feeds and make sure your cash flow is accurate with real-time numbers and you will be able to reconcile every single transaction you made in the last year within minutes. This is crucial for when the tax season comes and it will make your life a lot easier.

Track Your Sales Tax

Source: Accounting Web

Track and manage your sales taxes by inputting all sorts of municipal, state, regional, provincial, federal, or any other kind of taxes into your books. You can set up different names for each tax, and you can relate specific taxes to specific products or recurring transactions to save time. In this way you’ll be able to see the total amount of sales tax for each quarter of the year with no effort. Eliminate room for tax miscalculations and proof your assets against eventual liabilities.

Keep a Transactions History

Source: CPA Practice Advisor

A good thing to do is to keep control of all your financial transactions. Whenever you send an invoice, create a bill, do a bank reconciliation, or any other activity that involves the money in your bank accounts you should be able to closely monitor everything at hand. Details input in the transaction like dates, amount paid, amount received, taxes, fees, side notes, credits, interests, client information, chart of accounts, previous related transactions, etc.

Last But Not Least, Automate Your Receipt Data Entry

Source: Entrepreneur

Freelancers can save tons of time by using free automated receipt data entry tools that enables businesses to streamline accounting and bookkeeping tasks by automatically pulling information from bills and receipts and converting it into digital data. That puts an end to the boring and time-wasting tasks of manual data entry in bookkeeping. These tools can fetch all your documents stored in a specific folder, then read all your bills and receipts and create automatic transactions for you. Source documents will be attached to the transactions, and you just need to review and approve. Your documents will always stay with the transaction for convenience. This also audit proofs and disaster-proofs your business. You can instantly create transactions with pertinent information such as vendor name, transaction date, due date, amount, taxes, etc. to save considerable time on a daily basis.

Wrap Up

Source: TechMeme

That’s it! Now you are ready to go ahead and put these resources to work for you and make your life a lot easier. Accounting and bookkeeping might look like a challenge, but only if you have to wrong toolset at hand. Just find the best accounting and bookkeeping software that suits your needs and you’ll get things going in no time!