Want no-BS insights on building a highly profitable freelancing business?
✓ FREE 5 Day Course on Winning Top Paying Clients
✓ Q&A - Send In Your Questions, I Answer Them Here
✓ LIVE Webinars
✓ The Chance to Win a FREE Coaching Call
I guarantee 100% privacy. Your information will not be shared
This is Day 10 of 31 Days to Start a Freelancing Business (or Make Yours a Better One). Click here to read Day 1.
Today, we get practical and buckle down to think about financial matters. You have two tasks today:
1. Set a budget
Freelancing is a good biz because your overhead expenses are low. Nevertheless, you will have expenses, such as:
Equipment and supplies
For starters, go over the inventory of resources you made in Day 2. Are there pieces of equipment, software or other things you need to start freelancing, or to provide better services to your clients? Figure those into your budget.
Hopefully, your current computer is good enough for you to work efficiently. Otherwise, make that a top priority.
If you don’t have the money, you don’t need to buy everything right now. You can save up for non-urgent items as you begin to make money through freelancing.
You’ll also want to budget for regular office supplies, such as bond paper, printer ink, folders… whatever perishable materials you’ll be using regularly.
As you make more money, you’ll find that your expenses may increase. For example, you’ll need software or an online service to systematize your invoicing, expense tracking and other accounting tasks. If you’re savvy enough to handle your taxes, then you can find an abundance of online tools here.
In the beginning, your accounting “system” could consist of a spreadsheet on Google Docs or OpenOffice. That’s fine. But as you get more clients and more income, things can get unwieldy. It’s time to get an accounting software or online service. And that’s a good sign.
You may also start hiring other service providers, for example, a book keeper or accountant to prepare your taxes, a virtual assistant to maintain your websites, etc. It’s more cost-efficient to pay other people to do the stuff you’re not good at, than to try to do everything yourself and make expensive mistakes along the way. Not to mention the time it takes you away from doing profitable work.
You’ll also want to set aside a budget for marketing your services. This may include membership in forums where your target clients hang out, or access to freelancing job boards and marketplaces, such as Elance. Invest what you can afford, and remember to make your investment pay off.
Be active in forums. Monitor the job boards you belong to. Keep an eye on how much work each marketing venue is bringing to you. If you find yourself no longer using or benefiting from these services, then discontinue your membership.
If you plan to use business cards, letterheads, brochures and other printed materials, put their cost into your budget as well.
It’s also a good idea to set aside a certain amount every month for your continuing education and development in your field. It’s a good idea to keep your skills sharp and to stay up-to-date or even ahead of the trends in your industry. This enhances your USP, which means you stand out among your competitors.
2. Open a PayPal account
Speaking of money matters, how will your clients pay you? Do you want them to send you a check?
Personally, I use PayPal. It’s convenient for me and my clients. It’s fast and efficient, and provides me a way to monitor my earnings, other than the accounting service I use (which is LessAccounting.com, incidentally). PayPal integrates with LessAccounting, so that when I invoice my clients, they click a PayPal button right on the Email and are able to send me money.
PayPal does charge fees, depending on which funding source your clients use. Investigate these fees before you decide to use it as your main means of accepting payments.
For me, the PayPal fees are worth the convenience that I and my clients enjoy.
That’s it for today. Did I miss any financial stuff you should be preparing for? What business systems do you use or plan to use?
Do share in the comments below.
photo credit: skpy
PS: Some freelancers who are more experienced than I am recommend having a separate bank account solely for your freelancing income only.