5 Critical Accounting Tips for Freelancers

Tax Act

Freelancing has its privileges. It’s nice to be able to pick and choose your work, set your own hours, work from wherever you want to, and call yourself your own boss. However, along with all of those awesome pluses come a set of responsibilities that are unique to the self employed. One such area that seems to stump freelancers more often than not is accounting. Unfortunately, accounting mistakes can be very costly; therefore, freelancers must make special considerations throughout the year to ensure there are no mistakes come tax time. Here are five critical accounting tips for freelancers:

Automated invoicing. Sure, creating your own custom spreadsheet and doing your invoicing by hand is cheap and easy . . . but it also tends to turn into a mess when your freelancing business takes off. Invest in an invoicing software program that automates the process, or do your invoicing via an online accounting interface like freshbooks.com.

Estimated taxes. Pay your estimated taxes on time throughout the year, rather than wait for the big bill come tax season. Chances are those smaller payments will be much easier to make than one huge lump sum amount, so think ahead by paying now.

Record keeping. Buy a simple filing cabinet and organize all of your records. This includes contracts, invoices, and all important receipts. You will need them to itemize your tax forms at the end of the year and when they are all over the place, you are bound to leave some out. This could ultimately cost you, so it’s better to get into good record keeping habits now.

Don’t forget the small stuff. Many freelancers forget some of the simplest tax write offs associated with being a freelancer. For example, it is not unusual to leave things like office supplies and PayPal fees off the deductibles list, and those things can really add up.

Profit and loss statements. Make it a point to document all of your income and expenses as you go, and to use your accounting software to generate profit and loss statements on a regular basis. That way you are not in the dark when it comes to your finances and taxes.

As you can see, handling your accounting the right way is not that complicated. It is actually just a matter of forming some good habits and being diligent about the details. Follow these five simple tips throughout the year to make tracking your freelance income and filing your taxes as painless as possible.

About the Author: Nichol Linebrink is a freelance business consultant specializing in communications. She helps small businesses locate VOIP service provider contacts and other critical services so that they can keep themselves running with minimal overhead.

Top 5 tips for choosing Business Accounting Software

Tax Act

If your current business accounting processes are running out of steam or your business is simply growing too big for the standard accounting package you currently use, upgrading is the logical next step.

Whether you’re a small start-up or a complex enterprise, you’ll be met with myriad of software choices. Let’s look at five no-nonsense tips for choosing the right accounting software package for your needs:

  1. Identify extra features you may need – most businesses will need the basic out of the box finance package as a given which usually includes accounting, sales and purchasing management, asset registering and payroll. But do you also need stock control? What about intercompany reporting?
  2. Make sure the new software integrates with your existing processes – Let’s face it, your staff are used to doing things in a regular way and while it’s still effective, why change it? Some of the better accounting software products such as MYOB EXO Business will fit into your existing business processes and also help improve them.
  3. Multi users and security – Dealing with sensitive company financial data should be limited to those who have the rights to do so, but going a step further, you need to be able to limit what each user can access. For example, a junior accounts person should be setup with a restricted login with less access privileges than the chief financial controller.
  4. After sales support and training – learning your new accounting software and sorting out inevitable teething problems are made easier with quality support and training. Phone and email support are essential as is face to face training involving all relevant staff. This help can be particularly useful when software updates need to be applied.
  5. Speak to others in your industry – at your next networking function, actually raise the subject of accounting software. Now, you may think it’ll send people running for the toilet of a drink refill, but you’ll be surprised how many people will tell you their experience. They’ll often recommend business software experts who helped them.

So, there we have 5 brief but very important considerations to take into account (bad pun intended) to help you make the right decision. Making the wrong choice of software can lead to headaches further down the track and even worse, you could end up making some bad business decisions because of it. Take the time to weigh-up the functions and features you need and look for a product which comes with upgradable modules you can ‘snap’ in as and when you need them.

If you’re looking for a consultant who can scope, design, implement and configure a business accounting software solution specialising in MYOB EXO, try Horizon Business Systems, a Perth based, MYOB Platinum Partner.