Why Freelancers Should Care About Bookkeeping

Bookkeeping is often not always on the top mind of freelancers. You start your business because of an idea that you are passionate about and often that doesn’t include accounting. However, there are many reasons freelancers should care about keeping on top of their bookkeeping, and here are just a few.

Easier Trips to Your Accountant

You might be using an accountant to help you file your taxes. It is likely that those accountants charge a pretty expensive hourly rate. If you come with a shoebox of unorganized and sloppy records, you’re going to waste a lot of time and cost yourself a lot of money.

When your accountant doesn’t have to organize your financial records, they can focus their billable time on making sure that all of your tax forms are filled out properly before filing your taxes for you.

You’ll Be Ready for an Audit

There’s nothing more stressful for a freelancer than finding out you’re getting audited. The best way to painlessly get through the process is to have your financial records organized. The IRS selects freelancers for audits because of things they claim as deductions like home office expenses.

Plus, if your bookkeeping is organized you will be less likely to have mistakes on your tax filings and will be less likely to be red-flagged by the taxman.

Keeping up with Your Daily Business Tasks

By doing a little bit of accounting every day, you’ll make your overall operations are easier to handle. Organizing your receipts and invoices as they come in will save you from a huge amount of work during tax season.

As you make bookkeeping a part of your daily routine, you’ll be able to spend less time on it. This will give you more time to focus on your day-to-day work and even help you plan future growth.

Protecting Your Assets When Things Go South

It’s not fun to think about things that unexpectedly go wrong in your life that could impact your business. Good bookkeeping can keep you prepared for anything from a legal proceeding with an angry client to a difficult divorce proceeding.

While going through a legal proceeding your financial records will very likely play a critical role. Clean records will help your lawyer prove what assets and funds are truly yours.

Avoiding Legal Problems

There may be legal requirements in terms of your financial record keeping, depending on where you’re doing business. Failing to keep proper records could result in significant penalties and fines.

Recognizing Potential Issues

When you’re on top of your accounting and bookkeeping, you can anticipate future problems that your business might face.

By consistently analyzing your books you can notice serious financial irregularities before they become a problem. Maybe you will catch an upcoming cash flow problem, realize that you’re losing money on daily expenses or other serious issues impacting your bottom line.

Source: https://www.freshbooks.com/hub/accounting/bookkeeping-freelancers