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Bookkeeping and accounting as a freelancer can be easy—at first. You might only need a simple spreadsheet like Excel to track and organize your finances by yourself. But when your freelance business grows, so do the number of transactions. At this point, it makes a lot of sense to invest in freelance bookkeeping software to help you better manage your money.
Here are some signs that it’s time to consider an assist from bookkeeping software.
Hiring a bookkeeper may not be the most financially prudent course of action for your freelance company. You'd have to account for their salary while calculating your take-home pay. And if you do not yet have a consistent cash flow, you may find yourself paying their wages from your personal savings.
Hectic's paid plans start from $15.99 per month(when you pay annually), compared to the typical US accountant's hourly rate of $27.
Manually tracking your finances can eat up a significant amount of time, especially when bookkeeping isn’t your forte. For example, you have to make invoices and make sure the right invoice goes to the right client. It could get in the way of your actual freelancing work and affect your output.
Using a bookkeeping platform can streamline the process for you since they typically let you check how much clients owe you and send a billing statement with just a few clicks.
Your issue with DIY accounting may be that you are too busy with work to update your books often. This might lead to rushed accounting during tax season.
Updating your cash flow, balance sheet, and other sheets too quickly might cause errors. It may lead to under-reporting and under-paying taxes, resulting in IRS penalties.
Bookkeeping software saves you time by centralizing the processes of:
You won’t have to open multiple Excel files and calculate the numbers yourself.
One risk associated with manual freelance bookkeeping is that the work may be beyond your area of competence. As a consequence, you may overlook some of the taxes you owe. Additionally, you may have entered transactions with incorrect amounts in numerous spreadsheets, resulting in errors while reviewing the year's books.
Bookkeeping software assists you in maintaining more accurate records by automatically updating all your financial reports whenever you make changes. Additionally, the user interface of software like Hectic enables you to gain a more unified view of your information, rather than needing to switch back and forth between multiple spreadsheets.
Freelance bookkeeping is often simple when you’re still starting your career because you’re likely only handling one or two clients at a time. This makes it easier to track the money coming in and out. However, once your freelance business starts acquiring even more clients, you’ll have more cash coming in from multiple sources, which can become hard to track manually.
You’ll also have to account for issues like late payments and losing clients, which can temporarily disrupt your cash flow. Bookkeeping software generates cash flow statements so you can check the money coming in and out during a particular period.
Late payments aren’t always the fault of clients who don’t pay on time. You might not be keeping track of when you sent them an invoice—if you did send one at all. This can happen if you’re manually tracking payments. It’s too easy to miss a client or two.
Bookkeeping software automatically sends invoices to your clients according to the schedule you’ve set, saving you the time and effort of doing so yourself. If the client hasn’t paid on time, the software can also send them a reminder.
Ready to take the next step in managing your freelancing finances? With the Hectic app’s bookkeeping feature, you can easily:
To give you an even better hold over your finances, Hectic offers third-party compatibility with accounting apps like Xero and Quickbooks. You can try Hectic today or check out our blog for more freelancing advice.
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