Our best tips for managing money as a small biz or freelancer
When it comes to running your own business, you’ll realise quickly that running a business isn’t about just partaking in your chosen specialty of business, but everything else too. Like… Social Media Marketing, Copywriting, Designing, Photography, Email Marketing, Website Developing… when you’re fresh in business, you tend to wear ALL of the hats.
One of the most important tasks that you’ll need to undertake is becoming your own accountant (at least until you’re making enough money that you can hire your own).
Unfortunately, this tasks often gets avoided, especially if you’re more of a creative type (us creatives tend to put off anything to do with numbers).
But, let me tell you, this is one of the most important things that you need to consider setting up from the get go!
From accounting, to taxes, to paying yourself a wage each month; these are all things that will ensure that your small business will, and will continue to, run smoothly, and successfully.
And if you can get into the habit of keeping on top of this stuff, it will save you so much time and stress in the long run.
So after lots of trial and error in my own biz, today I’m going to tell you all about ways you can manage your money. Some you can start today, for free. Some are better for when you’re a bit further down the track. Either way, there’s something for everyone in here, and you NEED to be doing at least some of these things.
Set up multiple bank accounts
This sounds hard, but it’s not, and it’s going to save you so many headaches. You don’t have to start with a whole new bank or set up business accounts and credit cards or anything crazy.
Simply creating new accounts within your current bank account to separate and organize your money will make a huge difference when you want to pay yourself or when tax season rolls around.
I recommend creating separate accounts for:
Personal money — this one can be connected to your credit/debit card. You can pay yourself into this account from your business money account every month.
Business money — all income from business goes into this account, and all expenses leave from this account.
Tax savings — save a percentage every month for tax, depending on your estimated tax for the year. Put it in this account every month and don’t touch it until you’re ready to pay your taxes!
Personal savings — I’m a big believer in personal savings and adding to this every month. I’m also a believer in separating this from your personal money account, otherwise you’ll have access to spend it!
Optional extras:
GST savings — are you required to pay GST on your sales? Just like the tax savings account, your GST savings is where you save for the GST payments you will need to make every year.
Business expenses account and Business income account — if you want to get really fancy, you can split up your business money account into two separate accounts. All of your income comes into your business income account, and your expenses come out of your expenses account. This is good for when you start to get a higher income and have more expenses to keep track of.
This is such a simple and free/inexpensive thing to set up that is going to make such a huge difference when it comes to tracking all of your income and expenses. It also makes it easier for your to pay yourself and save personal money, without it getting mixed up with your business money.
Of course, when your small business turns into an empire, you would have completely separate accounts. But for a small biz, solopreneur or freelancer, this method works great!
Google Sheets
If you’re not yet at the stage in your business where you are able to put money aside for an accounting app or software subscription, then my suggestion to you is to track all of your income and expenses through a good ol’ Google Sheet!
Google Sheets is the Google version of a Spreadsheet (like Excel, but online!)
Spreadsheets are very flexible, and there is no one way to use them, but they’re awesome when it comes to tracking money.
I’m sure you’ll get into your own groove when it comes to managing your money and tracking your income with these sheets, but I’ll break down what I would recommend doing:
Create two separate sheets, one for your Income and one for your Expenses.
At the end of every month, you’re going to record all of your income and all of your expenses.
In the Expenses spreadsheet make sure to record:
The current month
Each expense in that month
How much each expense cost
A total of your expenses for the month
In the Income spreadsheet, make sure to record:
The current month
Your total income for the month (before expenses and tax deductions)
Your expenses total for the month (take this value from the expenses spreadsheet total)
Your estimated tax savings (eg 15% of your income after expenses)
The total amount left (which is your total income minus expenses and minus tax savings.) Then you can split this up into your Personal Money, Personal Savings and/or Business Savings (you can create custom columns / percentages for these which will make it even easier!)
This is such a simple way to track your money every month, and gives you a great overview of whether you are making money or losing money in your business. You can see your expenses vs your income, and you can track how much money you’re paying yourself and saving every month, too!
This method works really well when you have separated your bank accounts, too, as it makes it really easy to see where all of your money is coming and going from.
Pro tip: Make sure you’re making the most of the calculation features that come with using a spreadsheet. You can add in rules to different columns so that it automatically calculates for you. Eg, you could manually add in your income and expenses for the month, then you can have it set up so that it will automatically calculate the tax you need to put away, and the personal money and savings you can have for the month!
For invoicing: PayPal
PayPal is an encrypted platform that allows you to send, receive and spend money without needing to enter your bank details each time.
I love Paypal because it can handle multiple currencies. Because my business runs in multiple currencies, it’s the only online invoicing software that has been able to handle my business needs!
I can easily send invoices to clients in any currency, and I can take payments in multiple currencies, and it will transfer it to my main home currency. It makes working online across multiple currencies SO convenient!
I recommend signing up for a Paypal Business account, as then you can send and receive invoices easily (seriously, it’s SO easy to use).
A PayPal Business account is completely free, and you can send money between Paypal accounts for free, but it does charge credit card fees (at the standard rate, which you will get with any invoicing software) if you are using a Credit Card or invoicing clients who will be using Credit Cards, so it is important to keep this in mind.
PayPal is a great way to invoice and to pay. You are able to generate invoices within PayPal, pay invoices with Paypal and also send money directly to people and business, too.
PayPal will also send you push notifications on overdue payments, and when your recurring invoices are due.
Almost all business have Paypal, so you should definitely get yourself signed up! Whether you use it as your main way to send and receive payments or not, you should still have it as it’s likely that you will end up using it at some point!
For sending money internationally: Wise
TransferWise allows you to track your spending and income, and also offers far better rates than most international banks. TransferWise will also automatically convert any currency to your requested currency, and even offers their very own debit card.
I’ve never personally use Transferwise for business (I use it a TON in my personal life for travelling), but I do know of many online entrepreneurs that work in multi-currency who use it, and love it!
TransferWise is a great platform to use when working with international clients, or when you are selling products or services that can be used globally. TransferWise is incredibly safe, and requires an authorised verification code in order to approve any transaction that is being made.
I believe the biggest draw to using Transferwise is that they aim to have the lowest fees for transferring money internationally, compared to the regular international bank fees (which can be very high). It’s definitely one to check out if you feel like you are getting stung with currency charges!
XERO
Xero is one of the most popular accounting platforms for small businesses out there right now. Xero will help you to understand your profit and losses, it is able to send out invoices and is able capable of managing your expenses — this is an app that does everything.
Xero is an online accounting software that helps small to medium businesses track their income, expenses and invoices. It’s an automated software and when used consistently, it generates all the appropriate reports that you’d need when it comes to tax time.
It’s really an all-in-one platform, and tracks everything for you instead of doing it manually. You can send and receive invoices directly through the app, it will send you reminders when one of your invoices is overdue, and it will track all business income and expenses and payments.
If you are a small business who manages a team of freelancers or contractors, you are also able to control your payroll via Xero. This is a game changer — not to mention a worthy investment — when the time comes to expand your business!
It does cost though (around $20 and $40+ per month), and it takes a bit of work to set all of it up correctly so that it works for your business. But when you set it all up, it can be a huge time saver and a great virtual accounting assistant!
I highly recommend something like this to someone who has been in business for a while and has a higher income and more expenses to keep track of.
Of course, when your business goes BIG TIME, you can hire someone to handle all of this money stuff for you (and all of the other stuff you don’t really want to be doing!)
But full-time business accountants cost a pretty penny, and right now, you’re much better off starting smaller and working your way up from there.
It can seems pretty daunting to try to manage all of your money, but if you don’t, it’s hard to know if your business is even making money, and that’s a scary place to be in.
Take control of your money and business, and use the tools listed above to do it. Once you really get into it, it’s actually kinda fun (promise!) 😜
Want more tips for your small biz? Check out these posts!
Why you should be Blogging for your biz
How to create content that converts
How to create content frequently and consistently
5 Tips + Tools for Your First Year as a Freelancer
How to Onboard a New Client (my Complete Automated Process)
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