Freelancers and Expense Tracking

Freelancers are often busy: outside of working odd hours, they have to track their own business expenses, invoices, and taxes. Whether you decide to hire a CPA or take on everything by yourself, these tips will help you keep your finances in order.

Be transparent about your income and expenditures

Avoid the dreaded audit and always have a clear sense of your finances by simply being honest. Doing so will make filing taxes easier, and should you ever hire a CPA he or she will thank you.

Know your deductions

Do you have a home office? You can deduct some operating costs. Do you have to travel to meet a client or do research for a job? You can deduct those expenses. It behooves every freelancer to know what is and is not eligible for a tax deduction.

Use a separate bank account

Don’t count on your memory to track expenses and income. Doing so can lead to unfavorable discrepancies: if you overstate your income, you’ll pay too much in taxes; if you understate your income and the IRS finds out, you’ll have to pay back taxes which may include penalties and interest.

Utilize software

There’s an app for that. Even if you employ an accountant, proper software will help you stay organized and be able to present your expenses, invoices, and income.

Backup everything

Millennials and older generations remember tracking everything with paper records. While the tactile feeling of books may still be appealing, in the age of the cloud it’s a largely irresponsible way to track expenses by the simple fact that paper is hard to backup.

Backup your backups

This probably sounds absurd after we just pitched you on digital records over paper records. However cyber security threats are real and cloud storage is cheap–and in some cases free.

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