Simple Bookkeeping Tips
Bookkeeping is an important part of any freelance business. Unfortunately, as designers and creative types, it can sometimes be the most tedious and complicated task on your to-do list. But money is king, and if you don’t manage it well, your business is doomed from the start. So it’s important that you come up with a system for managing your finances. Here are some tips to get you started.
Set aside time
If you wait until you feel like handling your finances, then you might just never get around to it. So set aside a few hours once or twice a week to sort your materials, pay your bills, and send out invoices. This time will be much more productive if you stay organized throughout the week. When you receive bills, sort them by date and put them in a folder. And make sure not to get behind week to week. If you find you’re always playing catch-up or taking time from your regular work week to send payments or invoices just before the due date, you’re probably not setting aside enough time to work on your bookkeeping.
Take shortcuts wherever possible
Unlike your design work, where you usually take as much time as you need to make sure every detail is perfect, your bookkeeping only needs to be satisfactory. So taking shortcuts in this process is absolutely acceptable. Set up automatic payments wherever you can, come up with a template for your invoices so that you can just fill in the necessary fields, and do whatever else you can to decrease your workload in this area.
Keep an eye on your calendar
It might seem tedious to mark down every little thing on your calendar, but when you’re searching all over your inbox for that one invoice or email from a client, you’ll wish you would have just wrote it on your calendar. Simply copying and pasting a few details from an email conversation or invoice can help save lots of time. Keep a separate calendar for your bookkeeping, where you can mark down payments due (both from you and from your clients) so you don’t get it mixed up with your appointments or project due dates. This is very easy to do with Google Calendar or iCal.
Be prepared for everything
Everyone is late sometimes, especially when it comes to payments. So you need to be prepared for your clients to make late payments. Have a system in place before you even get started. Figure out interest or late penalties, or whether you’ll offer any kind of grace period for any reason. Explaining all of this in the contract when you first sign a new client will save you a lot of time in the long run, and will help you to avoid any awkward situations or misunderstandings.
Budget, budget, budget
This is something you probably already have set up, as most business owners do. However, it’s important that you not only have a standard monthly budget that tracks your expenses and projected income, but a few backups as well. We all know that the economy is capable of crippling businesses of all sizes, but you’re much less likely to face serious problems if you’re prepared. Keep a budget that tracks your finances in a worst-case scenario, showing possible cuts you could make to your expenses or even your own salary. It might seem difficult, but knowing your business can make it through hard times (even if those times never occur) can offer a great amount of security.
Managing money can be difficult for creative types, but by staying organized and setting aside time to get it done, your bookkeeping won’t take up too much of your design time. Do you have any other money-management tips for your fellow designers?