How much do you know about financial operations for self-employed freelancers like you?
Was your answer, “Not much”? If so, I totally get it. After all, that’s how I started out too.
I chose the “ignorance is bliss” route … and I definitely regret it.
Here’s what happened: When I first started out with my own business, finances kind of intimidated me. It was a lot of information that I didn’t fully understand … so I just chose not to understand it for a time.
If I had taken the time in the beginning to make sure I understood financial operations for self-employed business owners, I would have saved myself a lot of headaches. And I probably would’ve made a LOT more money, let’s be honest.
Once I actually took the plunge and started learning about financial operations, I was amazed at how empowering and easy it actually is.
And believe me, it will be just as empowering and easy for you, too.
Don’t you have dreams of running a business that’s sustainable, efficient, and makes you gobs of money? Yeah, I thought so. 😉
To reach those dreams, you have to understand financial operations for self-employed freelancers. Good news is … it’s not that hard. And once you have a handle on it, you can scale your business, make more money, and have more free time. Sounds nice, right?
Let’s dive in.
Profit First: The Heart of Financial Operations for Self-Employed Freelancers
Your first step in understanding money operations should be reading Profit First by Mike Michalowicz.
In this book, Michalowicz walks you through four principles to simplify your accounting and easily manage a profitable business.
Normally, businesses use this formula to figure out their profit:
Sales – Expenses = Profit
But Michalowicz flips this traditional accounting formula on its head. His Profit First Formula is simple:
Sales – Profit = Expenses
This way, you are always taking home profit. Growing your business with this mindset will ensure your business always stays profitable.
Invoicing: Try Freshbooks
If you want to receive payment for the work you do, sending invoices to clients in a timely manner is crucial.
This is why you need a system in place that keeps your invoices organized. For that, I recommend Freshbooks, which I use all the time. Freshbooks makes it easy to invoice clients on a retainer and set various hourly rates.
For example, I might have a “blended” rate model where I charge my premium hourly rate for marketing-related work, but then I’ll charge a lower rate for weekly status calls. At the end of each month, Freshbooks will automatically create an invoice out of the time I tracked.
This makes financial operations for self-employed solopreneurs super easy! Click here to sign up.
Need More Advanced Bookkeeping? Try Bench
If your business is still new or relatively small, Freshbooks may be all you need for bookkeeping. But once your business grows and your expenses increase, you’ll need something more advanced.
That’s where Bench comes in. Bench charges less than $200 a month for its bookkeeping services. After I switched to Bench, my accountant appreciated how clean the books were!
I used to have to explain a lot of my transactions to my accountant. Now, my Bench rep takes care of that for me.
You’ll need to pay yourself properly to avoid jarring tax bills. Even though you’re the only one working for your company, it’s crucial that you take payroll.
My accountant used to process payroll for me, but I found it cumbersome and inconvenient since our schedules didn’t match.
When I began using Gusto, I loved how it let me stay in control and kept me compliant with the laws. And on top of that—it cost me less!
Plus, Gusto is perfect if you need to pay contractors. You can go to their website to learn more.
Accounting is one of the most important aspects of financial operations for self-employed professionals.
Sorry, there’s no cool tool I can offer you here. But that’s only because a human accountant is truly the best option I can recommend!
Face-to-face interaction will make your accounting so much easier, believe me.
A quick Google search will help you find local accountants. Choose a few and set up a meeting to see which one you feel most comfortable with.
If you decide to use the Profit First Formula, make sure you ask the prospective accountants about that during your meetings. If they’re not familiar with it, then they may not be the best choice for you.
For me, I wanted to hire an accountant who would keep me in line and make sure I didn’t miss any deadlines. Find out what’s important to you and stick to that!
Hey! Before you go…
Want more insight into how to start your freelance business? Download my Six-Figure Freelancer Guide and get dozens of pages packed with real-life experience and insight.
And if you want to take this a step further, join my Six-Figure Freelancer Facebook Group. Get to know other ambitious solopreneurs like you and receive the support you need.