Knowing how to manage your freelance income is the first step to successfully running your own business! These tips for tracking money and time will help freelancers of all shapes and sizes.
Before the tips, a quip:
“Money is better than poverty, if only for financial reasons.” ~ Woody Allen.
Yes, you love working as a freelancer — but let’s face it, you need to make money. And you need to be organized about tracking your time, money, and projects.
Use these tips and tools to keep your income and expenses under control…
4 Ways to Manage Money and Time as a Freelancer
Whether you’re a freelance writer or another kind of online entrepreneur, every penny counts – and you need to count those pennies. It’s essential to keep a handle on your online income. At the end of the tax year, you don’t want to be frantically searching for scraps of paper or wondering why the money in your bank account doesn’t match your earnings forecast!
Managing freelance income isn’t as tricky as it sounds…
Track Your Clients
First of all, you need to keep track of your clients. It’s always useful to have multiple ways to contact them (email, landline, cell phone, Skype) and to have this information at your fingertips. Offline, you can manage this information in MS Outlook or a similar program. Online, the choice is endless. I’ve found Google Contacts a bit limited, but a good option is Gist. It aggregates all your social media contacts, pulls in their latest tweets and news, and allows you to decide which contacts it’s most important to track. Managing freelance income is about being organized in all aspects of your business — not just the money you make.
Track Your Time (because time is freelance income!)
Time is money, so it’s essential to track the time spent working for clients, as well as your time spent doing other things. When you work online as a freelancer, it can sometimes be difficult to separate client research from following up a personal interest – one can easily segue into the other. In addition, to make sure that you’re billing clients correctly and earning the right amount for your efforts, it’s important to know just how long a particular job takes. It’s essential to use a time tracker.
There are many options for time trackers, from paid tools that include invoicing such as Freckle to free tools such as Online Stopwatch. If you want a “set it and forget it” option, try something like RescueTime. It runs in the background and can help you separate productive activities from those that aren’t. There’s also Chrometa, which allows you to allocate tasks as simple as opening certain folders to particular clients. It’s a bit pricey at $19 a month, but it works.
Manage Your Invoices
As a freelancer, invoicing is the lifeblood of your business (apart from doing the work itself). To make sure that money is in your account – and not your client’s – invoice as soon as a job is finished. Set the payment terms that work for you. It’s helpful to allocate a day each week or month to process invoices – and to chase for payment if that’s necessary. Managing your income may involve asking repeatedly to get paid, unfortunately.
Like time tracking tools, invoicing tools are varied. Some freelance writers generate simple invoices in a word processing or spreadsheet program (see A Freelance Writer’s Invoice for an example), while others prefer invoices that look nicer. There are lots and lots of invoicing tools to help you manage your freelance income. Many freelancers rate FreshBooks, which incorporates accounting functions, but you can also use the free Billing Boss or send invoices from an accounting package such as QuickBooks.
Take Care of Your Taxes
Tax time can be scary for the new freelancer, but if you keep the books properly during the year, there’s nothing to worry about. All you need is the right software, which could be QuickBooks Pro (available in desktop and online versions), FreshBooks, LessAccounting or any of the dozens or accounting applications that exist for desktop and web. Check for services that integrate with each other. Some accounting services work with Shoeboxed.com, which is a great way to keep your receipts safe.
The best way to manage freelance income and keep your finances healthy and under control is to track your clients, time, invoicing, and tax information.
If you’re a chronically disorganized freelancer, you might find this Electronic Filing Cabinet For Dummies helpful.
How do you manage your freelance income? Comments and questions welcome below!
And if you’re not earning enough to actually track your income, read How to Ask for More Money Writing – Tips for Freelance Writers.
Sharon Hurley Hall is a professional web content writer and blogger. She runs Get Paid to Write Online, which offers tips and advice for freelance writers. Follow her on Twitter:@shurleyhall. You can see Sharon’s other Quips and Tips posts here.