When you’re busy freelancing and focusing on bringing the money in, you might not be aware of things you’re doing (or not doing) that could mean the money is then slipping back out.
In this blog we look at the top ways in which you can save money as a freelancer.
Time is money
Being self-employed means that every second of yours is precious, and if a client wants any of that time then they should pay for it. So ensuring you’re tracking it correctly and allocating it to each job and client is critical in being paid what you’re owed, but how do you do it?
Here at Taxevo we both offer and include FreeAgent accounting software in all our packages, which provides a handy stopwatch timer, so you’re able to keep real-time track of your work and projects. When you pause a project, the tool creates an instant time slip which you’re then able to attach to your invoice and send onto your client. It’s also a fantastic tool to use to see how you’re using your time, and give you an insight into ways in which you could possibly use your time more effectively.
Review your working environment
One of the beautiful things about freelancing as a career is that you can work literally anywhere, so long as you have the equipment that’s needed for the job. So this could be your favourite coffee shop, restaurant or even from home. But wherever you choose to work it’s worth noting the associated costs with each decision.
If you choose to work at a coffee shop or restaurant you’ll be expected to purchase food and / or drinks in order to work there, and whilst the odd morning or day here and there won’t break the bank, if you make it a daily occurrence then costs can quickly creep up on you.
There are ways in which you can work that’ll keep the costs down. If you’re working from home there are expenses you’re able to claim, and we’ve explored them all in our blog. Or if you prefer to work surrounded by people but want to keep the costs down, then you could always try your local library or find a co-working space.
Account for tax and business costs
If you’re new to freelancing, the concept of putting aside the correct amount of money each month to pay for your tax and National Insurance Contributions (NICs) along with any other business costs can seem overwhelming. Put aside too little and you’ll have to find the money come tax return season, and put aside too much and you may find yourself struggling monthly to pay yourself. Remember that you can also be fined for filing your self-assessment late, and may even need to fork out for professional help if you leave it too late and need an accountant last minute rather than having one on a running monthly basis.
By enlisting the services of a specialist freelancer accountant you’ll be able to get tailored advice and support based on your earnings, outgoings and the amount you’ll owe to HMRC. They’ll be able to advise you on what to keep aside, and what’s available to you so you’re able to pay yourself in the most tax efficient way possible.
Make a monthly budget
Budgets are not very exciting, but can be integral to keeping your spending in check. Each month make a list of any known outgoings you’ll have to make, such as your tax and NIC due, business costs (such as insurance, equipment costs, etc), travel costs to and from your client (should you need to meet with them) and maybe any life costs, such as taking annual leave whereby you won’t be earning.
If you find you’re exceeding your budget on a monthly basis, by keeping a spending record you’ll be able to see clearly where you’ve over spent. It’s could then be a good time to reconsider your outgoings and how much you’re charging your clients.
Buy second hand where you can
Equipment needed to do your job can be expensive, especially if you rely on computer equipment to get the job done. Whilst it’s nice to have everything brand new, you can find that there’s money to be saved if you are able to purchase either second hand, refurbished or even the previous model of hardware. If you’re just starting out then saving money will be important, so getting yourself set up and ready to get freelancing in this way will really help you out.
Ask an expert how to maximise your take home pay
You can try every trick in the book to save money when freelancing, but there will still be some which only a specialist accountant will be able to advise you on, based on your own personal and professional circumstances. This could be anything from the amount you take as a salary and how much in dividends you pay yourself, to ways in which you can reduce your tax and NICs by paying into a personal pension; there are many ways an accountant can guide you to ensure your money is working as hard as possible for you.
Here at Taxevo we do just that for freelancers and contractors every day. We keep HMRC happy by ensuring they’re paid everything that’s owed, but not a penny more. With expert accountants at your fingertips, specialist advice and packages starting from only £25 per month, find out more today.