It is quite difficult and confusing to handle one’s finances while starting out a venture. If you are planning to set-up your small business as a freelance designer, here are some pointers:
1. Open a separate bank account
It is very important to separate your personal bank account from your business bank account. This will help you keep track of your expenses and available balance. You can try signing-up for an online account to get higher interest rates. Check out HSBC Direct or ING Direct.
2. Track your expenses (and income)
This is a must for everyone. Whether it’s for your personal use, or freelance activities, you have to track your spending to see where your money is going (and coming from). I keep a notepad and write my daily expenses (and income) . There are several online finance programs that you can use, like Mint and Wesabe…you can also set it up on a calendar in your computer. Whatever works for you.
3. Keep your receipts
By keeping your receipts, you can deduct all legitimate deductions come tax time. It will also save you a lot of headaches.
4. Save all contracts or purchase orders and related correspondence
It is always better to be safe than sorry. I have heard a lot of stories about freelancers who were not paid for their services, and small business owners selling their designs/products to stores that didn’t pay them. It’s best to keep some form of evidence so that you can chase after in the event that this scenario happens. Knock on wood.
5. Send an invoice A.S.A.P.
Many freelancers fail to invoice quickly. I would suggest to send out the invoice as soon as you’re done with the project. This will help get your payment faster. And when it comes to payment terms – try putting “To be paid immediately“, or if you’re feeling a bit lenient, write “To be paid within 30 days of invoice date.”