4 Tips for Keeping Your Freelance Finances In Check
If you’re just launching your freelance design business, you’re probably focused on all of those big starting out questions: Am I doing all of the right things to find clients? Does my website represent my work well? How do I make the most of social media?
Crucial questions, to be sure, but as your business takes off (and it will do so), making sure your financial systems are in order will save you big headaches in the long run. The smoother your financial systems run, the less time you’ll spend chasing down invoices and compiling hours, the more time you’ll spend designing. Here are our top 4 tips for staying on top of it all.
4. Create a Contract Before You Start Work
When you’re on your own, the incentive to please potential clients can overrule all. But, if you’re not careful, catering too much to client demands can render your RFP moot. That’s why it’s important that everyone be clear on terms ahead of time, whether that means:
- Laying out exactly what kind of design work will be included in the purchased package. Will you be creating a single website, or will your work also include a logo and a branding consult?
- Determining how much face to face or phone time will be included.
- Agreeing on a clear pricing structure and payment calendar
If you’re not well-versed in legalese, there are plenty of templates for these kinds of contracts available on the web, and it shouldn’t be difficult to find a design colleague to share one of their own. Use an electronic site like HelloFax to do this quickly and efficiently, circumventing the need for a scanner or printed letters.
3. Make it Easy for Clients to Pay You
Do you remember the last time a checkout clerk told you needed to pay via check or cash rather than by credit card? Yeah, probably not. Save your clients from this same annoyance when you allow them to pay via credit card. PayPal and Quicken are both easy ways to do this online, while Square and Intuit’s Go Payment are easily attached to a smartphone or tablet for payment right after you’ve landed that in-person pitch. Just a swipe and you’ve got all the details you need so you won’t have to chase down payments later on.
2. Know and Prepare for Your Tax Obligations
Whether you’re officially filed as an LLC or you’re just winging it as a sole proprietor, when you’re self-employed, you most likely have to pay estimated tax every quarter to either the state or federal government.
There may also be corporate taxes involved, sales tax, or, when you hire on employees, payroll tax. Consult with the IRS or a trusted accountant or lawyer so that you’re sure of your obligations. Then set up a dedicate savings account in which you regularly deposit the recommended percentage of your paycheck for those quarterly taxes, making sure to consult again with your tax professionals as your revenue increases and you move up tax brackets.
1. Use a Comprehensive Invoicing System
While that sole Excel sheet might do the trick at first, you’ll soon find it’s a major headache to manually pull your tracked hours and customer data into an invoicing template. And, the longer you put the task off, the greater of a distance the customer will put between the work you did and the money they owe, the more difficult it will be to get paid. Choose a comprehensive invoicing system from the get go — one in which it’s easy to enter time, add billable hours to invoices, analyze customer payment behavior, and track down unpaid invoices.
Having this kind of system in place will make invoicing less of a headache, which increases the likelihood you’ll do it regularly — say, once every week or two, so you have a constant flow of cash.
You might not have fantasized about managing finances when you first decided to become a freelance designer, but getting these systems set is just what you need to grow your business and concentrate on the creative work that gets your heart pumping. Get it sorted, and start designing!
