Starting as a freelancer means having to learn fast in several areas. Besides having the skills to impress your clients, you also need to consider where your time goes.
Managing finances is one of the most time-consuming tasks. But luckily, there’s a lot of accounting software to choose from to make your life easier. Here are nine reasons why your freelance business needs accounting software.
1. Become More Efficient
Time is your most important asset as a freelancer. Managing your time wisely is paramount to success. Manual tasks, such as bookkeeping, are major time-consuming.
With accounting software, you can keep your books up-to-date by recording payments with the click of a button. You can also set up systems to automatically add them each month for recurring ingoing and outgoing payments.
Accounting software can help you save time so you can take on more projects, or focus deep on existing tasks. Or, if you’d prefer, you can relax for a few hours at the end of the day instead.
2. Keep Track of Your Payments
For many freelancers, receiving late payments is an unfortunate reality. But many of these could be avoided with a little persistence and keeping track of your payments.
As you grow, keeping track of who owes you how much and when they must pay is increasingly important. Otherwise, a lot of extra revenue could slip through the cracks.
With accounting software, you can keep track of your payments by creating lists of your pending invoices.
Depending on the app you use, you can also set up reminders for when to follow up. Once you start monitoring your payments more closely, you should have fewer late invoices to chase.
3. Stay Motivated
Although being your own boss and having the ability to work from everywhere are exciting, freelancing is by no means plain sailing.
You will go through periods of low motivation and occasionally question why you started. If you’re not in a position to hire a coworking space, technology can help to keep you motivated.
Accounting software shows a complete overview of your financial performance. Because of this, you can forecast your future growth and set realistic targets. In some apps, you can also add your goals and completion dates within the software.
4. Improve Your Cash Flow
Many freelancers get their income from a variety of sources, and their outgoing payments are just as varied. If your finances aren’t centralized, it’s easy to lose track of how much you’re making and spending each month.
When you use accounting software, you get a complete overview of how much you’re spending and what you’re getting for your work.
Once you have this information, you can look at areas to cut your costs. Besides, if you are not satisfied with your rates, you can increase them or seek out higher-paying projects.
5. Take the Stress Out of Tax Season
If you find yourself pulling your hair out every time tax season comes around, investing in accounting software is a good idea.
Besides getting a clear picture of your cash flow, you’ll also know that your reports are accurate. Therefore, you won’t run the risk of needing to pay more tax later.
When tax season comes around, all you need to do is either copy the numbers from your software or hand everything over to your accountant.
6. Protect Yourself Legally
In many countries, you’re required by law to keep your books up-to-date. And when it comes to tax, inaccurate information is more than just an annoyance—you could be fined or even imprisoned in some cases.
If you live in the US and are subject to a tax audit by the IRS, organizing your business’ finances in an accounting software platform will protect you. You might also save extra money on having to hire an accountant or tax preparer in such incidences.
7. Pay Other People Easier
As you become more confident with your freelancing, you might decide that you want to scale. If hiring employees is part of your growth plans, you need to figure out how to give them their salaries each month.
With accounting software, you can automate your payroll as and when you need to pay your employees and contractors. Beyond ensuring that your workers are paid on time, you’ll also make sure that there are fewer inaccuracies in the amount you should pay them.
With fewer inaccuracies in your payments, accounting software for your payroll can also save you time and money.
8. Move Your Money Around Faster
Do you take payments from international clients? If so, chances are that you have various accounts set up to avoid foreign exchange and international transfer fees as much as possible.
However, the problem with having so many accounts is that moving your money into your primary bank account each month becomes more time-consuming.
When you use accounting software, you centralize your payments as and when they come in. Then, at the end of the month, you can distribute your earnings between taxes, your salary, and your business account.
Some accounting software platforms also let you connect your bank account, so you can get paid there.
9. Create More Professional Documents
When running your own freelance business, you must have paperwork templates in place. Contracts, invoices, and proposals will all improve your efficiency and protect you legally.
Having professional-looking documents is equally as important as having them outright, though. If you hastily put your contracts and invoices together, you’ll give off the impression that you’re unprofessional.
With accounting software, you can create your documents in most apps. Templates are readily available; you only need to add a few customizable details for each client and project.
By creating easier-to-read and more pleasing documents on the eye, you’ll take yourself more seriously, and so will your clients.
Spend More Time on the Tasks You Love
When freelancing, it’s important to remember that you’re running a business. Therefore, you must treat it like such. To improve your efficiency, you need to invest in processes and systems, such as accounting software.
Using the right accounting software can save you time, allowing you to focus more on building relationships and creating high-quality work.