Freelancer's Financial Plan
More and more of the workshops I present are a hybrid between personal finance and professional finance for your business. These tend to be geared towards freelancers, entrepreneurs and startups. While they seem different, there are many areas that overlap.
If you are a freelancer or business owner, here are some steps for your Freelancer Financial Plan- including how to set competitive rates!
Track Your income. It seems so simple but can help you focus making more money. Besides the fact it is integral to staying organized with our finances. Use Quickbooks, Bench, bookkeeper, Excel, even handwritten on a pad!
Invoice Clients ASAP. You’ve earned the money now collect it! Check out freshbooks, zoho, wave and zipbooks.
Get Organized for Taxes. Create a separate savings account for taxes. Don’t get caught owing money you haven’t set aside. If you aren’t sure how much to set aside, start with 25% of every dollar earned! As soon as you get paid, put that amount in a separate savings account. Consider: ally.com or capitalone360.com.
Setup Your Freelancer Retirement Plan.
Ok. There isn't an official one, but if you earn less than $123,000 as a single person or $193,000 as a married couple, open a Roth IRA at Vanguard. If you are earning at least $75,000, open a SEP IRA instead or as well.
Set Competitive Rates.
Find out what going rates are at salary.com and fairygodboss.com. At the same time, go through this calculation. For example: If you calculate that you need $5,000 month to live on, plus another $1,000 for savings and retirement, that’s $6,000 total you need to earn post tax. Pre-tax that’s $$8,500. If you charge $150 per hour, you need to see 56 client per month or 14 clients per week.