Are you self-employed? Then you may have already noticed that one of those responsibilities that will help you boost your business is to keep your financial strategy in order. In this article, we’ll give you the tips you need to get started with your accounting as a freelancer.
Accounting for the self-employed
When we mention accounting, we refer to a system of registration, study and classification of the operations performed by your company, taking into account a chronological order and the different tax obligations to which it is subject, within a tax system.
Therefore, in the case of a freelancer, it means to be up to date with the financial and economic movements that can generate the activity in which you perform.
Why is it important to keep your accounting records as a freelancer?
It is no secret that keeping a record of the operations you carry out in your business requires time and dedication, however, the rewards are invaluable. But what do we mean by this?
If you are self-employed and want to take care of your own accounting, here’s how important it is to do so:
It allows you to know in depth the financial status of your business.
It is a key factor to comply legally and rigorously with the tax obligations required by the Tax Agency.
Helps you make future investment decisions or foresee possible threats that may affect your activities
Ideal to know about the existing financial relationship with your customers or suppliers.
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Tips for managing your own accounting as a freelancer
At TAS Consulting we have a team of accounting experts who can help you day by day to keep your business operations in order. Therefore, to encourage you to manage your own accounting as a freelancer we leave you six tips that you can not overlook:
1. Make a budget
It seems logical, but in many cases, when working as a freelancer you forget an essential aspect such as creating a budget for your business. By creating your budget, you will be able to have control over the resources you have on a monthly basis.
In addition, it is important to avoid making unnecessary credit applications or using your savings at the wrong time.
So, the first thing we recommend you to do to optimize your accounting as a freelancer is to establish an adequate and proportional amount to your expenses that will allow you to create an order and make effective use of your money.
2. Separate your personal and professional expenses
Continuing in the same vein, not only should you create an optimal budget, but you also need to realize that your money is divided in two ways and only you can control it: personally and professionally.
In this sense, the advice to follow is to strictly delimit your personal expenses from those related to your business. Therefore, when you have to deal with work-related bills, avoid paying with money used in your day-to-day life.
3. Define a collection policy
While it is true that each client is different, and as a freelancer you must adapt your actions to ensure that the relationship is carried out in the best possible way, make sure you establish guidelines regarding a collection policy.
Therefore, when we talk about a collection policy, we are referring to the procedure that will allow you to receive income from customers, as well as their payment facilities and the credit system if applicable.
The truth is that, regardless of the policy you choose, it is very important that you apply it to all your customers, so that you can keep track of your income and record it effectively.
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4. Record your income and expenses
In order to record both your income and expenses in a satisfactory way, you can take into account 3 key aspects that will help you to obtain a proper accounting:
Methods of payment
5. Take taxes into account
Both entrepreneurs and freelancers must deal with the taxation of their businesses. Therefore, in addition to registering with the tax authorities, you must keep up to date with taxes such as VAT and personal income tax, and take them into account when preparing your accounts.
Personal Income Tax (IRPF) must be paid quarterly, and is levied on your business income as a self-employed person.
Value Added Tax (VAT) must be declared quarterly; it is levied on consumption and is paid by the end consumer.
Corporate Income Tax (IS) will be obligatory only in those cases in which the activity is carried out within a commercial company, and not through Personal Income Tax (IRPF).
6. Be frequent
Use an accounting program and don’t forget to review your operations weekly and monthly, so that you can evaluate changes as they occur and make strategic decisions that will benefit you in the future.
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Working as a freelancer allows you to be in control of your time, but it also means you have a huge commitment to make sure your finances don’t suffer. Now that you’ve read about our basic tips for keeping your own accounts, are you ready to boost your business? Remember, if you have any questions, you can contact our experts through our website.