Apr 22, 2018  | Tags: freelancer, entrepreneur, financial planning

Our Insights

Working for yourself can give you boundless freedom. Running your own small business or freelance operation gives you the power to earn and work as much as you want, whenever you want.

But to successfully live from one unpredictable paycheck to the next, you need to be disciplined and on top of your cash flow. 

The following tips will help you make a success of your freelancing or solo business.

Remember, Cash is King (and You Need the Right Software to Manage It)

Never forget how critical it is to manage your cash flow! There are many little details you never notice when you work as an employee for a company. Once you get your own business, however, you have to watch every penny.

This is where effective software will come in handy. Xero is a good example of DIY accounting software.

Self-employed income is fickle, but try to maintain a semblance of consistency when spending your earnings. After accounting for tax, savings, retirement, insurance and so on, allot a small portion that you can budget for living expenses each month. This will help you to keep living within your means. 

Get Smart With Invoicing

It may take you some time to get used to billing clients. Make sure terms are clear and that your clients know exactly what they’re paying for and when you expect payment by. This will help you avoid any unpleasant disputes.

Put Something Aside During Good Times to Cover the Lean

Did we mention that self-employment income is fickle? You don’t get guaranteed cash like you did when you were employed by someone else. Sometimes the opportunities aren't there, no matter how far and wide you look. 

There's also risk that injury or sickness hits you or a loved one, putting a dent in your earning capacity (fingers crossed this doesn't happen).

To help cover those lean times, make sure to set aside a little more than usual during the good months.

Separate Business and Personal Finances

Maintain separate business accounts so that you can keep better track of how your business is doing financially. This will also make it easier come tax time to write off business expenses. 

Seriously Consider Taking Out Personal Insurance

What if something happens and you can’t work? You don't have sick leave or a workers compensation scheme to fall back on. Talk to your financial adviser about the cover you need and explore the best options.

Get Reliable Professional Advice

Do you know which business structure is the best for you? How can you find the biggest tax savings? What should you be charging your clients or customers? How should you plan for your financial future, personally and for your business?

Ideally, you should work with both an accountant and financial adviser to ensure you're making the smartest decisions. Find out more about the differing roles of both professionals and how they work for you. 

For expert financial advice to help you kick your wealth goals, contact Calder Wealth Management.

Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.