6 financial mistakes you should avoid in freelance work
Freelance work allows freedom and flexibility to work whenever and wherever you want. But requires rigor and discipline to the same extent. We share some financial mistakes in freelance work.
Professionals in this scheme have associated a set of responsibilities and duties to fulfill, namely tax duties. Whether it is work organization, for all deadlines to be met, or financial planning necessary to keep personal finances balanced, it is important to set goals and budgets.
In this article we make known 6 financial mistakes that should pay attention if it is or intends to work as a freelancer:
1. Do not take one day a month to organize the accounts
Mastering finances are crucial for anyone who works on a freelance basis. It is very easy to lose control of all deadlines and obligations. So we advise you to take a day or a certain amount of time into your schedule to review all the costs and all the revenue you had.
By having this routine you will not only make a more efficient management of your money. But you will realize which are the fairest budgets for your work.
There are several budget management tools on the market, such as Boonzi, a great help in the financial management of freelancers. It is a software that allows you to see all the movements in detail, with a “copy/paste” from the bank statement, as well as categorizes them and gives you a prediction of how much money you will have on day x, for example.
On the other hand, you can also count on accounting services to help organize the accounts of your sole proprietorship or corporate.
One golden rule to keep in mind is that the budget cannot be managed like that of a person receiving a paycheck every month. There is a balance between the months of higher and lower income that must be taken into account. Therefore, avoid at all costs the use of credit cards or personal credits, as well as purchases in installments. If you already have several credits consider joining all in one, with a lower rate and in one installment. It is one of the financial mistakes we did.
In addition to strict financial control, there is a need for medium-term planning, which is also rigorous. When you do not have a regular income, the need to have a budget for a longer term is even more pressing. So make sure your expenses are covered for a minimum of three months. In this way, you will not only work without the hassle of knowing if you will be able to pay your expenses the following month, you will have time to find an alternative in case of an emergency, such as losing an important client. It is one of the financial mistakes we did. Continue reading- Five common reasons for not taking financial advice
There are hidden costs that go beyond working hours and should be considered in a budget. Although you can work wherever you want and when you want. If you work on a freelance basis do not forget that you also pay taxes. Consume electricity and have costs associated with your area, namely buying specific software for the performance of a certain task.
So you should have the notion that if you make a budget that does not consider these costs you are losing money.
This is a very common mistake for the entire population, but it becomes especially serious in the case of those who work on a freelance basis because of the unstable nature of this type of work. Since there is no regular income, it is necessary to ensure that it has an emergency fund in case of unforeseen events. Such as a disease that prevents the work from being carried out
In this case, insurance for self-employed workers may also be considered. Which depending on the insurer may provide protection in case of accidents at work. Personal accidents or legal protection, among other coverages. This is an additional annual cost that will bring benefits. Because in the event of an unforeseen event you can even prevent it from affecting your savings.
6.Failure to pay taxes
This error may seem very obvious, however, it is very recurrent and it is extremely important not to forget it. A delay in paying taxes may entail additional costs that will unbalance the entire budget. So, schedule the payment dates you have to make and prevent fines or late fees.
Managing the budget and making proper planning is of the utmost importance for freelance work. So do not delay: make an action plan for your finances and live a more rested life.
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