If I only had room for three words in this entire chapter, they would be hire a pro
fessional.
An accountant or bookkeeper will bring your accounts under control much faster than you ever could, and they’re very likely to save you money as well. Let’s face it: we might be fantastic at with crafting standards-compliant XHTML, or designing very usable and nicely designed interfaces, but we aren’t on this planet to be ac countants or lawyers. This is exactly the reason that most accountants or legal experts don’t design or build their own web sites—it’s not in their range of competencies or interests.
When I first started out on my own, I was very conscious about not spending any more money than I absolutely needed to. This would mean that I would often wrestle with my own bookkeeping well into the night and on weekends, in order to keep the accounts up-to-date. I took the same approach with every other element of my newly created job; I didn’t particularly like most of these extra chores, to be honest, and I wasn’t great at some of them. I would either complete these tasks far slower than others would, or worse still, not do them at all.
One day, a wise friend asked me how long it took me to do my monthly accounts. When I explained that I spent most of every weekend on them, it was quickly pointed out that it was costing me hundreds of dollars in lost income, not to mention priceless and necessary downtime, to do the books badly. When we weighed up the billable rate per hour that I lost as a result of working on non-billable stuff instead of money-making projects, and then compared that to having a bookkeeper do in a couple of hours a task that took me all weekend, I quickly decided to loosen the purse strings the smart way.
Let’s use a simplified example. Say you charge yourself out at $100 per hour, and it takes you an entire day to manage your books per month, then the actual cost to you is around $750, assuming you could bill yourself out for seven-and-a-half hours that day.
Now, you go to a local accountant or bookkeeper and ask them to do your monthly books at $50 per hour, and they take four hours. Not only have you saved yourself the headache of doing the work, you are over $500 better off, assuming you can fill that day with billable work.
If you’re really lucky, you may find a professional nearby in the need of your services;
both parties win if you can barter work with them!
It’s worth having some awareness of your own finances, of course. However, the opportunity lost when you spend an entire day every fortnight on your accounts when you could be earning hundreds with billable work, should make sense straight away. If this isn’t enough to convince you, consider your knowledge of account- ing—do you feel satisfied that you know every single tax deduction and tax strategy to save you from paying more tax than you need to? Are you confident that you know a Profit and Loss statement in intimate detail?
If you have answered in the negative to either of these questions, do yourself a huge favor, and find a great accountant (ask for referrals from other freelancers, ask your bank manager or insurance broker, or ask industry and social contacts for referrals) who understand freelancers and can give you great advice.
If you are reasonably confident in your own abilities, perhaps you could ask for a quarterly or annual review. Regardless of the frequency, I urge you to seek profes sional financial opinion—regularly.
Managing Your Money … with a Little Help
One of the biggest reasons freelancers fail in their first year or two stems from their lack of financial planning and control. It can often feel overwhelming to manage your accounts, but without good management, the money could dry up.
Don’t be hesitant to ask others for advice. There are plenty of online forums and web sites discussing money matters, and professional help from your accountant can make a world of difference.
You are not alone in facing these hurdles, so embrace opportunities for assistance from others who know accounting inside and out—it may save you from having to ditch freelance life and seek employment.
Making More Money … with a Little Help
This may sound ridiculously obvious, yet we all suffer from letting ourselves be come wrapped up in the detail. This trap means that we forget about the most important detail of all, which is to find out what makes us profitable so that we can repeat it.
We all have projects or tasks that we need to do regularly, but upon analyzing them in more detail, it’s often clear that many of them waste time and make no profit. Or, even worse, end up making a loss. Stop doing them—hand them over to a professional!
It’s hard as a freelancer to learn to say no, but if you don’t, you can easily become caught in spending your time on less profitable activities. Get in the habit of reg ularly reviewing your time sheets and your income—discover where your real profit lies, and concentrate on that.
fessional.
An accountant or bookkeeper will bring your accounts under control much faster than you ever could, and they’re very likely to save you money as well. Let’s face it: we might be fantastic at with crafting standards-compliant XHTML, or designing very usable and nicely designed interfaces, but we aren’t on this planet to be ac countants or lawyers. This is exactly the reason that most accountants or legal experts don’t design or build their own web sites—it’s not in their range of competencies or interests.
When I first started out on my own, I was very conscious about not spending any more money than I absolutely needed to. This would mean that I would often wrestle with my own bookkeeping well into the night and on weekends, in order to keep the accounts up-to-date. I took the same approach with every other element of my newly created job; I didn’t particularly like most of these extra chores, to be honest, and I wasn’t great at some of them. I would either complete these tasks far slower than others would, or worse still, not do them at all.
One day, a wise friend asked me how long it took me to do my monthly accounts. When I explained that I spent most of every weekend on them, it was quickly pointed out that it was costing me hundreds of dollars in lost income, not to mention priceless and necessary downtime, to do the books badly. When we weighed up the billable rate per hour that I lost as a result of working on non-billable stuff instead of money-making projects, and then compared that to having a bookkeeper do in a couple of hours a task that took me all weekend, I quickly decided to loosen the purse strings the smart way.
Let’s use a simplified example. Say you charge yourself out at $100 per hour, and it takes you an entire day to manage your books per month, then the actual cost to you is around $750, assuming you could bill yourself out for seven-and-a-half hours that day.
Now, you go to a local accountant or bookkeeper and ask them to do your monthly books at $50 per hour, and they take four hours. Not only have you saved yourself the headache of doing the work, you are over $500 better off, assuming you can fill that day with billable work.
If you’re really lucky, you may find a professional nearby in the need of your services;
both parties win if you can barter work with them!
It’s worth having some awareness of your own finances, of course. However, the opportunity lost when you spend an entire day every fortnight on your accounts when you could be earning hundreds with billable work, should make sense straight away. If this isn’t enough to convince you, consider your knowledge of account- ing—do you feel satisfied that you know every single tax deduction and tax strategy to save you from paying more tax than you need to? Are you confident that you know a Profit and Loss statement in intimate detail?
If you have answered in the negative to either of these questions, do yourself a huge favor, and find a great accountant (ask for referrals from other freelancers, ask your bank manager or insurance broker, or ask industry and social contacts for referrals) who understand freelancers and can give you great advice.
If you are reasonably confident in your own abilities, perhaps you could ask for a quarterly or annual review. Regardless of the frequency, I urge you to seek profes sional financial opinion—regularly.
Managing Your Money … with a Little Help
One of the biggest reasons freelancers fail in their first year or two stems from their lack of financial planning and control. It can often feel overwhelming to manage your accounts, but without good management, the money could dry up.
Don’t be hesitant to ask others for advice. There are plenty of online forums and web sites discussing money matters, and professional help from your accountant can make a world of difference.
You are not alone in facing these hurdles, so embrace opportunities for assistance from others who know accounting inside and out—it may save you from having to ditch freelance life and seek employment.
Making More Money … with a Little Help
This may sound ridiculously obvious, yet we all suffer from letting ourselves be come wrapped up in the detail. This trap means that we forget about the most important detail of all, which is to find out what makes us profitable so that we can repeat it.
We all have projects or tasks that we need to do regularly, but upon analyzing them in more detail, it’s often clear that many of them waste time and make no profit. Or, even worse, end up making a loss. Stop doing them—hand them over to a professional!
It’s hard as a freelancer to learn to say no, but if you don’t, you can easily become caught in spending your time on less profitable activities. Get in the habit of reg ularly reviewing your time sheets and your income—discover where your real profit lies, and concentrate on that.
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