Bookkeeping for Self Employed
Being a self-employed individual is not that easy. You are the only one who manages your business, and this includes all your finances. Proper financial management is not something you learn overnight but by experience. For some people, it may take months or years to be able to grasp and apply proper financial management in their business. Bookkeeping for Self Employed individual helps in managing their finances and overall expenses that has been done.
Bookkeeping Tips for Self Employed
Here are some five bookkeeping tips for self-employed individuals to help you get through the process of bookkeeping.
- Always keep your financial documents
There might be some instances that your business gets audited or investigated, and they will ask for important documents like bank statements, invoices, etc. If you didn’t provide them with any of these, then you’re going to get in trouble, trust me.
Ensure that you have original (and back up) copies of your financial documents because aside from avoiding you into serious financial troubles, it can also help lessen your tax. This financial documents also serve as a proof that there is a transaction made for the business.
2. Keep a log sheet of your income and expenses.
Keeping a log sheet of all your income and expenses means being secured and prepared when tough financial situations come. Don’t just rely on checking your online and mobile banking, since it doesn’t tell you where and when your money is going and coming. Monitoring your income and expenses helps you to check your spending habits, budgeting becomes easier and you will be able to track your cash inflow vs. outflow. With this, you’ll know if your business is earning or not.
3. Separate business and personal accounts.
This tip is also applicable to those with large businesses, however, this is much helpful for those who are self-employed. It’s very difficult to separate business and personal since your work is so much integrated into your personal life. To overcome this, you need to open separate accounts for business transactions. Doing this will help you track your business activities easier, budgeting is more simplified and you’ll also avoid getting into financial troubles.
4. Use technology
Managing bookkeeping all by yourself can be overwhelming. Well, technology is here to save the day. There are available online applications that you can use such as Taxumo that allows freelancers and SMEs to simplify the bookkeeping process. It works by auto-generating journal entries and paste/transfer to your Manual Books of Accounts.
5. Learn more about finance and taxation.
Even applying the mentioned tips above, it is still advisable to learn more about finance and taxation. Not to mention that many freelancers lose their money because of lack of knowledge on the matter. You can learn by enrolling to short courses or if you want to save money, there are many available courses offered online. Aside from helping you in bookkeeping, it will also help you raise your brand and manage your finances wisely.
With determination and doing the right habits, you’ll manage bookkeeping easily in no time. Don’t let being a self-employed become a hindrance to you for exploring and growing your career.