Working in your own terms definitely sounds promising, and many people are now shifting to this kind of lifestyle as contractors or freelancers. Contrast to being employees of larger companies, contractors have more freedom to pursue projects they find more valuable and fulfilling and are rewarded appropriately for their efforts, and not with a fixed salary.
While it has many advantages, being a contractor also poses few disadvantages. One of them is the challenge of dealing with finances.
Bookkeeping can be a challenge for someone with an inconsistent monthly income, several revenue streams, and for someone not familiar with tax requirements and benefits for this kind of employment.
Fortunately, we have listed ways to stay on track by managing your bookkeeping tasks accordingly. Read more to find out!
Separate Personal and Business Finance
Many start-up contractors fail to create separate accounts for personal and business finance earlier stage of their business, and gets confused with their cash flow and liabilities. This can result in financial trouble on both sides. To avoid this, create separate bank accounts for your business and personal use to make your bookkeeping simple and help you stay compliant with your tax obligations.
Know Your Territory
Now that you’re working for yourself, you should be familiar with the rules and regulations about taxes applicable to your type of employment. Not only will this help you stay out of legal troubles, this can also translate into tax benefits and refunds you might not know exists. Keep informed and stay updated with governing tax laws.
Don’t Forget to Get Paid
It’s easy to lose track of all the invoices when you’re doing all the business tasks by yourself. You might focus on providing excellent service and completely forget about getting your deserved payments. Set a regular schedule for invoicing and sending reminders, if necessary, to ensure all your work is paid off.
Use Accounting Software
Instead of filing everything on word documents or spreadsheets, use accounting software to keep up with your bookkeeping tasks. These programs are specifically designed for bookkeeping and offer features to eliminate manual processing of your financial data.
Keep and Backup Financial Records
Just like with other files, you should always have a complete and updated record of your finances and have it backed up. Accounting software nowadays has cloud storage solutions so you can access your files from anywhere using any device, as long as you have an internet connection. This way, you eliminate chances of having your files lost and the need to consolidate later on.
Hire a Bookkeeping Service Provider
Growing your business comes with challenges that are not present during your days as an employee, and having to deal with obligations like bookkeeping can multiply these difficulties. Outsourcing your bookkeeping task is the best solution to these problems.
By hiring an expert bookkeeping team, you can have a more accurate record, avoid breaking tax laws, take advantage of tax benefits, improve cash flow, and get help from someone familiar with bookkeeping software.
It may seem like an additional expense, but the return can be in multiple folds, not just in terms of money, but also time, stress, and accuracy.
Being a contractor is not an easy path to take. But with the freedom to do what you love anytime and anywhere you want, the time you can spend with family and loved ones and the chance to create your own success, it’s all worth it.
Contact us today to get help with bookkeeping for contractors, and free yourself from having to crunch numbers, and have the time to build your own business empire!