If you said to the more than 59 million U.S. gig workers that freelancing is the American dream of work, you would be preaching to the choir. And to a fast-growing choir as it’s estimated that 50.9% of the total U.S. workforce will be freelancing by 2027.
But these stats are just food for thought for you who’s already running a profitable freelance business. And you would agree that the challenge most freelancers grapple with is managing their freelance earnings. The unpredictable ebb and flow of freelance work makes managing freelance income knotty but even more necessary.
You must create and manage a budget for your freelance business if you are to put your financial house in order. These four tips should get you started.
Variable income is one of the harsher realities for freelancers. Not unless you strictly work on a retainer basis, it is hard to get a fixed income from your freelance business regularly. But you can track your monthly or quarterly earnings and get an average figure. This gives you some balance in price setting and budgeting.
When bidding for work, it helps you price your services correctly in your budget proposals. You’ll not undersell your services or time because you can quickly reference the average figure and work your budget proposals around it.
As a financial best practice, you should manage your personal and business bank accounts separately to make bookkeeping easy. It’s easy to track and quantify all your freelance expenses and personal expenses when you manage them from separate accounts. Tax filing and reporting is also more manageable this way and streamlines your financial operations.
You need a flexible budget that can accommodate your variable income and expenses. It’s why setting a monthly budget makes more financial sense. You may borrow from the zero-budget technique to simplify your process. This technique allows you to budget for incoming money before it hits your bank account and keeps your business expenses at a minimum.
The feast and famine circles of freelancing may mean that you have a month or some months with little or zero income. The only way to prepare and eclipse your freelance lulls is to save more during your high seasons. Having a rainy day fund saves you from going into debt or out of business because you cannot afford your basic freelance expenses.
Lunafi makes accounting for your freelance business a breeze.
With Lunafi, you can manage your budget and finances seamlessly, uncover possible write-offs to get more bang for your buck, generate business reports in a click, and compare your per-client earnings. All these functions in one app? How convenient is that?
Get the Lunafi app today, and thank us later.
Meet Kyle Waugh, a personal training and rehab specialist and read more on how COVID-19 hit made him start his business.
Lunafi's automated accounting solutions ensure you never lose track of your income, expenses, and tax obligations again. Streamline your business finances with our platform.
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