Although being your own boss is one major perk of being a freelancer, keeping an eye on finances and tax management are more tedious aspects of the job. With paychecks coming from various sources for different amounts, you need to have a plan in place to ensure you have funds for business expenses, the cost of living, and rainy day emergencies. For financial stability as a freelancer, follow the below advice.   

3 Financial Strategies for Freelancers

1. Open a Business Account

If you put freelancing payments and all other funds in the same checking account, create a separate account to hold business finances. This way, you won’t use the money needed for living for work-related expenses and vice versa. Having a business account is useful for tax management, too, as you won’t have to comb through months of transactions to determine which business expenses you can write off.   

2. Set a Monthly Budget

After getting a large check for a project, you might be tempted to use the money to pay for vacations or other high-priced items. Responsible spending will ensure you don’t run out of money before receiving the next paycheck. From rent to groceries, figure out how much money you spend each month. Use that number to determine a monthly budget for living expenses and how much you need to make to live comfortably. You can also create a budget to determine your financial goal to pay for extra items. 

3. File Taxes Quarterly

As a freelancer, taxes might not be automatically taken out of your paychecks. This means you could owe a lot in state and federal taxes. Filing quarterly will help with tax management. Self-employed individuals who owe the IRS more than $1,000 in federal income tax for the tax year are required to file quarterly. Doing so will help you avoid penalties and financial strain at tax time.

The certified public accountants at Cloyd & Associates PSC will help you create an effective financial plan. They are dedicated to making sure self-employed clients in Kentucky’s Laurel, Whitley, and Knox counties enjoy the flexibility of freelancing with the financial security of full-time employment. From assisting with bookkeeping to sharing tips to prepare for tax season, they will assist wherever needed. To learn more about tax management and additional financial services the accountants provide, call the London office at (606) 864-8110 or dial (606) 528-8776 for the Corbin branch. You can also visit the firm online to request an appointment.