A Freelancer’s Guide To Saving Money
If you are a freelancer, it is essential to keep track of your income and your spending. Calculating Freelancer Taxes isn’t an easy thing, and it gets out of hands if you delay it to the last minute. Depending on how you took up freelancing, you might be earning more or less than your full-time job. Considering the comparative market, we believe it is possible that you will be earning less. Hence, it becomes all the more important to save money. But, that’s the hard part. Let’s find some ways together through which you can save money as a freelancer!
Keep Your Day Job
It might seem stupid to add a part-time work clause for a freelancer, but hear us out. It is vital that you continue with a daytime job until you do not establish an entire freelancing business. By establishing, we do not mean getting extra gigs. What we mean is that you understand how working from home is and how to keep up with the tax and bookkeeping function. If your feet aren’t solid in the group, we suggest you keep making an extra income with freelancing and save it for days when you are struggling with full-time freelancing.
When you are working as a freelancer part-time, you have to declare that extra income you are making. It will be taxed alongside your regular income. Most of the freelancers either end up overpaying or underpaying their taxes, which then turns into a hassle. Thus, it is crucial that you keep track of every invoice billed, every income you received and how & where it is spent. For full-time freelancers, bookkeeping becomes a lot easier, because they are self-employed. In any case, believe us when we say you will be saving a lot when you are bookkeeping correctly.
We understand how difficult it is to invoice a client and set payment terms accordingly. While most of the freelancers are struggling to get clients, it is also essential that you do not undersell yourself. Similarly, know that the same client wouldn’t even think twice before dropping you in favour of someone is charging much less and providing the same quality. It is significant that you set your prices as per the market conditions, so the cash flow is steady and justifiable as well. If you want to continue making an extra income, make sure that the payment terms are set out in stone, so you get your money as soon as the project completes. That is the only way you will be able to save because late payments always land you in trouble.
These were our three crucial tips that help you in saving money. In the end, you know yourself and your capability better. But, take it from us that calculating freelancer taxes isn’t an easy thing if you are freelancing alongside the day job (which you should). Hence, be smart with where you spend your money and how much you charge, even better if you get some professional help to manage your freelance taxes. So, you can save some extra bucks to help you with your bucket list.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning. Connect with him on LinkedIn, Twitter, Facebook or Instagram.