Establish a Comprehensive Accounting System
Before you type a word, you should track every outgoing and incoming expense through an excel spreadsheet (or something similar). You’re a business owner now, so it’s essential to know how much money is coming in and going out.
Every business needs an accounting system to see how much revenue they bring in to offset their expenses. Revenue is not the same as profit, either. Profit is what you make after your expenses are deducted from your sales, which is why it’s important to track.
Some bloggers and influencers suggest purchasing expensive software or incurring more debt with an added monthly cost associated with most accounting apps.
Unless your business is enormous or you have enough revenue coming in to justify the added monthly expense, it’s not necessary.
All it takes is an excel spreadsheet and some due diligence on your part to account for every penny.
So What do I Track?
You don’t need to pay money for accounting software or applications because the expenses are relatively easy to calculate and are based on common sense.
Every business-related expense should be annotated and tracked, so:
- Website hosting and design
- Outreach marketing
- Software tools and applications
- Email marketing
- Advertising
This is not all-inclusive but gives you a general idea.
In addition, it’s also a good idea to track hours worked. If not for invoicing purposes, but so that you know how many hours you worked on a given day. There’s no point in pursuing freelance work if you can make as much money at a regular 9–5 job.
As for tracking incoming revenue, any money you make from freelance writing, including:
- Client work
- Blog posts (if paid)
- Affiliate program
- Products you own and sell
- Recurring revenue from courses
Separate Business Expenses from Personal
Again, this is your business. Personal expenses and revenue ( if you have another job or source of income) should be separate.
This not only ensures your business numbers are correct and ‘in the green,’ but it’s good practice not to mesh the two.
It’s no different than if you owned a bakery. Is it a good idea to take money from the cash register for a personal expense?
Of course not.
Your business calculations will not add up at the end of the workday; it makes it harder for you to know your numbers and whether you need to adjust your business model.
Everyone wants to be paid for the hard work they put into starting and running a business. Just know there is a right way to do things and a horribly wrong way.
Put Money Aside for Taxes
One way or the other, the taxman gets his.
Just because you’re not a traditional employer and don’t have a 401K or any employees, you’re exempt from paying taxes. If you make money in business, you must pay taxes.
For this reason, it’s a good idea to set aside roughly 25% to 30% per job.
I know it sucks, but this is a significantly better option than paying thousands of dollars every March. And don’t even think about hiding any money because tax evasion is a serious offense.
If you can, charge a little more per job to make up for the 25% to 30% you set aside.
Refuse any work without a signed contract
If a client is legitimate and the work is worth it, they will have no problem signing a document stating exactly how much money you're owed for whatever work performed.
I know it’s hard enough finding enough writing jobs that you don’t want to risk scaring off potential leads.
But you’ll be glad you did. If you have a general policy requiring all clients to sign a contract, this will help eliminate those trying to get free work (and they will come). As long as the contract protects the client as well as yourself, there should be minimal pushback.
Avoid “Shiny Object” Syndrome
One of the best pieces of advice for any freelance writer (especially those just starting) is to avoid “shiny objects.”
In other words, don’t purchase unnecessary products.
Most products I purchased in the early stages of my career I either didn’t use or didn’t use to the fullest extent.
Thinking back, I could do without them. Unfortunately, though, I got caught up in the moment and bought products on impulse.
Advertisers will come for you in your career, and you may be moved and get a twinkle in your eye with the product they pitch you. Just ignore and walk away. A good rule of thumb for startups: If it’s not necessary, don’t buy it.
However, as with any business, there are reasonable expenses. Such expenses include:
- Web hosting
- Theme Building
- Email Marketing
- Software applications like Grammarly
Concluding Thoughts
These 5 tips will save you loads of time and money. Money is apparent, but it will save you time by not getting lost in the vast landscape of cyber products and wormholes.
Remember, it’s a business. If you treat it like one, it will nourish into one.
