As we begin a new year, freelancers have a fresh start to implement healthy financial practices. This article shares six simple strategies that can help you successfully manage your freelancing finances and build your business.
Incorporate Your Business.
We recognize that at SoleVenture, we probably sound like a broken record with our recommendation that freelancers should incorporate their businesses. But that is only because we want you to set yourself up for a lucrative financial future! Forming your business entity properly is the foundational step that will help you on your freelancing journey. For the reasons we discuss in more detail here, incorporating your business can help you maximize revenue, reduce liability, and enhance branding and credibility.
Use a Business Bank Account & Manage Your Transactions.
To manage your business properly, you must have an understanding of what you are earning and spending. You can accomplish this by maintaining a separate business bank account (and credit card if applicable) and by using an effective platform to manage your financial transactions. The SoleVenture app has an easy-to-use feature that allows you to categorize your business income and expenses in real-time and estimate quarterly and annual payments accordingly.
Understand Your Taxes.
Familiarizing yourself with available tax deductions is essential to maximizing revenue. Freelancers have access to many valuable expense-related tax deductions and write-offs that can increase your bottom line and even help you grow your business when utilized correctly. Learn more about some of them here.
Build an Emergency Fund.
If 2020 taught us anything, it is that we can never truly know what the future holds. We can, however, try to prepare for the unknown as best we can. If you are in the financial position to do so, building an emergency fund in 2021 is an excellent way to proactively plan for the future. Whether you incur an unexpected business loss, medical expense, or repair bill, having funds in place to take care of these expenses will keep you on track with your overall financial goals and help manage related stress.
Follow PPP Updates and Apply for Assistance.
Unfortunately, the first round of the Paycheck Protection Program (PPP) did not provide much support to freelancers who were negatively impacted by COVID-19. Luckily, the second round is more generous (learn about it here). In addition, the incoming Biden Administration is expected to provide additional support to workers and certain small businesses in the coming months. Follow SoleVenture for continuous updates and guidance on the financial relief available to freelancers.
Get Professional Help.
Establishing a solid foundation for your business’s financial success will likely necessitate enlisting professional help. Whether you need help incorporating your business, identifying tax savings, or planning for your future, don’t be afraid to seek support. SoleVenture can help you with a number of these things.
As detailed in each of the strategies above, investing your time in practicing good financial habits today will help create an environment for a lucrative freelancing business tomorrow. Download the SoleVenture app today and access the financial tools you need to manage your business.