Boost Freelance Profits with Good Accounting
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Unless you’re running a freelance accounting business, doing the books probably isn’t your favourite business activity. Unfortunately, while it’s a chore for many, it’s a necessary one, even if it means you must step back a bit while you learn accounting.
It can also help make it a more welcome activity when you take on board all the good things that come from accounting, and what a positive effect that simple set of numbers can have.
From increased profits to better, more efficient working practices, here are a few of the benefits you’ll get by delving deeper into your business accounts.
Steadier Cash Flow
Without a healthy flow of cash through your business, problems are very likely and may even be terminal. Money must flow both in and out of the business, so you can fund new projects, buy new materials, pay client invoices, and pay yourself.
Ideally, the business will fund itself so you shouldn’t have to dip into your own pocket to keep it going. With healthy accounting you can see immediately where you stand with the bank, what capital assets the business holds, and exactly what’s happening with income and expense.
More Accurate Costings
Whether you’re submitting a formal tender or doing a quick reckon up of how much a small job will cost to complete for a client, it helps to have a history of transactions to consult. Without up-to-date accounts you run the risk of selling yourself short and undermining your profits.
When jobs consistently take longer than you expect, or cost more to implement than you thought, the business quickly loses money. If financial losses aren’t spotted and corrected, the business could ultimately fail.
Friendlier Banking
Bank managers look much kindlier on business owners who can demonstrate financial awareness. Having good accounts to back up a loan application – or even if you just want to extend your overdraft – puts you in a much stronger position. Your accounts will instil confidence in the loan manager that you can afford the expected repayments.
A Secure Future
Far from being just a set of reports and a few columns of figures, your accounts are key to the business’ future security.
You can analyse past performance, see where the business is growing and where it’s standing still, you can compare how it’s doing now against the same period a year ago or a decade ago. Your accounts enable you to make swift, informed decisions about areas to expand and build on, or areas of business to contract or even close.
At the same time, you can use your accounting history to predict potential slow or busy periods, allowing you to prepare for anticipated feasts or famines.
Multiple Avenues
Access to good accounting is relatively straightforward, whether you want to do it yourself or hire professional help. If you’re not too sure how to go about keeping your own books, a course in accounting will give you the confidence to dive in.
Alternatively, choose the level of professional help you need:
Hire a bookkeeper if you need more casual help to keep the finances straight. Often self-employed themselves, bookkeepers understand the strains you might be feeling and can take accounting worries off your mind. They’ll also take care of invoices if you want. You will, at least, have peace of mind from knowing your books are in order and ready for the end-of-year tax return.
Accountants, on the other hand, will compile all your end-of-year reports and figures, and file your tax return. They’ll make sure you’re claiming all your expenses and allowances so you’re not paying too much tax. They may even be able to offer advice if they can see areas where you could make savings or work more efficiently.
Some people choose a hybrid route, doing a bit themselves and hiring help for the trickier parts. That’s perfectly fine too, if you understand the bigger picture and how to use your accounts to the best advantage.
And as a hidden benefit to all that accounting work, should you ever decide to close your business and return to more traditional employment, you’ll have solid financial skills that many employers want and need.
