Being an independent contractor means you’re the boss, which is awesome! But it also means you’re the finance department, which… might not be as exciting. Keeping your books in order doesn’t have to be a daunting task, though. With a few simple strategies (and the help of Frankly Bookkeeping and our eight-armed bookkeeping buddy, Augie the Octopus), you can stay on top of your finances and focus on your business.
Here are some tips to make bookkeeping less painful and maybe even… dare we say it, fun? (Okay, fun might be a stretch but stick with us.)
1. Separate Your Business and Personal Finances
The first rule of contractor life: keep your business and personal money apart, like two kids in the backseat who keep fighting over invisible lines. Open a separate bank account for your business income and expenses. This makes it easier to track what’s going in and out and helps you avoid digging through personal transactions when tax time rolls around.
2. Track Everything (Yes, Everything)
Receipts aren’t just tiny scraps of paper that clog your wallet; they’re proof of your expenses! Use an app or spreadsheet to log all your income and expenses. Even that $5 coffee you bought during a client meeting counts. Many apps let you scan receipts, so you don’t have to keep a shoebox full of paper. (Unless you’re into that retro vibe, then by all means.)
3. Know Your Deductions
One of the perks of being your own boss? Tax deductions! You can claim expenses like home office supplies, mileage, internet bills, and even part of your rent if you work from home. Just make sure these expenses are strictly for business. The IRS doesn’t care if your cat’s fancy litter box was a “work necessity.” Augie’s tip: Keep a list of potential deductions handy so you don’t forget any.
4. Set Aside Money for Taxes
Speaking of the IRS, it’s a good idea to set aside around 25-30% of your income for taxes. A separate savings account for this purpose can save you from scrambling when quarterly taxes are due. Think of it as a gift to your future self (even if it’s the most boring gift ever).
5. Use Accounting Software
You don’t have to be a math whiz to keep your books in check. Tools like Augie’s go-to, QuickBooks Online, can help you manage invoices and track expenses. It’s like having a digital assistant who doesn’t need coffee breaks.
6. Update Your Records At Least Monthly
Bookkeeping isn’t a one-and-done deal. Schedule weekly or monthly time blocks to update your records. This keeps things manageable and prevents the dreaded “end-of-year panic.” Plus, staying on top of your finances can help you spot trends, like which clients might need a nudge to pay up. Augie’s motto: “A watched ledger stays balanced.”
7. Get Professional Help if Needed
Sometimes, the best way to simplify your finances is to let a pro handle them. Hiring a bookkeeper (like the experts at Frankly Bookkeeping) can free up your time to focus on your actual work (and maybe even take a day off—imagine that!).
Augie's Advice
Bookkeeping doesn’t have to be a chore that hangs over your head like a storm cloud. With the right tools and habits, you can keep your finances organized and your stress levels low. And hey, the more streamlined your finances, the more time you’ll have to do what you love.
With Frankly Bookkeeping and Augie the Octopus in your corner, you’re not just keeping your books balanced—you’re mastering the art of financial finesse. Now go forth and conquer those numbers like the boss you are!
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