WASHINGTON — Whether you call it gig economy or freelancing or career independence, more and more people in the Washington area are breaking out on their own.
For those newbies, reality sets in when they realize they are not only the talent, but also the payroll department, finance department, human resources department and procurement department.
Small business accounting and invoicing software company Freshbooks has a checklist for freelancers to help keep things in order.
One of the top things self-employed workers need to discipline themselves on is paying themselves a regular salary.
“Once you start working for yourself, it is hard to think about when money comes in the bank, whose money is it. Is it yours? Is it money you have to put back into the business? Is it the government’s money?” Matt Baker, at Freshbooks, told WTOP.
“What we recommend is that you do a little bit of math on what of that money coming in is really yours as the entrepreneur,” he said.
Another important habit is maintaining a budget.
Freshbooks said that while that might sound like a no-brainer, just 45 percent of freelancers and small business owners actually keep to a budget.
When you’re working for yourself, there’s no boss taking taxes out of your check. And only 48 percent of people working for themselves say they put money away throughout the course of the year to pay their taxes.
“What happens is that if you’re not saving along the way, you can really fall behind and then when tax time comes you can find yourself scrambling to find an awful lot of money to pay back the government,” Baker said.
“What we say is that each time you get paid, that would be the best time to set aside something like 30 percent for taxes,” he said.
Freshbooks also said it is important for freelancers to keep their business and personal finances separate. And to use accounting services, like its own bookkeeping software.
