Business

How to manage finances when you are self-employed

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As a self-employed person, you have a lot on your plate from creating content, engaging your audience and managing your business, you’ve got your hands full. If you work from home, it is essential to put things in perspective. One of these things is your finances. The outflow and inflow of your money should be made a top priority, and here is how you can manage it.

Distinguish between personal and business account

The business entity concept states that the owner and the company should be separated. The same logic applies to the bank account used for personal and company expenses.

This will allow you to monitor the growing changes in your finance, and companies return in due time. On the aspect of taxation, it will eliminate double taxation and bring in deductibles that get accrued to self-employed individuals.

Use accounting software

There are lots of less complicated accounting software in the market that can help you track your income and expenses, and go further to monitor your returns, assets, and liabilities as well. Keeping track of all these enables you to stay on track when a mortgage is due or a premium needs to get paid for your insurance.

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Manage cash inflow and outflow

We know it is not always rosy in the business. Sometimes you wait for the sales to start growing and at other times, you feel you cannot handle them alone. Such a situation requires saving for rainy days. Not many people save when they are self-employed because of the steady flow of income and the opportunity cost of not seeking employment. But you have to if you don’t want to declare bankruptcy!

3 Benefits of QuickBooks Self-Employed

Charge what you are worth

Not many freelancers charge what they are worth as a freelancer or independent business owner because of cut-throat competitions. For some reason, they would rather cut price for the next customer not to look the other way. Time is significant for a self-employed person, manage your time very well, and make sure it matches with the pay.

Review your books yourself

It is okay to glance through your books every week and see where you can make improvements in terms of finances. It might also be the time to maintain an amount of cash outflow and inflow to know where you’re headed.

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