Most freelancers are in denial about their finances, putting off even thinking about them until taxes are due again–with grave consequences (as you’ll see later on).

However, recording and monitoring your “books” or records of financial transactions is an essential part of running a business.

If you’re just starting out, you probably do your own bookkeeping and tax preparation. As your business grows, you’ll be better off getting professionals to do it for you. Either way, you need to understand the basic processes involved in bookkeeping and accounting.

To help us get a better grip of bookkeeping, I have interviewed Monica Ross, President of Virtual Bookeeping. Read on to find out what tips a professional bookkeeper has for freelancers, especially those of us who want to do everything ourselves.

First Things First

Let’s make sure we understand the terms we’re using here. Bookkeeping refers to how you record a business transaction. Whether you use a notebook, a spreadsheet, or full-blown software to record your expenses and income, that’s bookkeeping.

On the other hand, accounting is a much broader term. There are many aspects of accounting–including bookkeeping activities, preparing and auditing financial reports, and understanding and advising on tax matters.

Therefore, bookkeeping is part of accounting. However, accounting goes farther. It includes analyzing and reporting financial information. For example, when you analyze how profitable your freelancing has been, you’re performing an accounting activity. When you prepare your own tax returns, you’re doing accounting.

Now that we’ve got the semantics cleared up, let’s move on to…

A Bookkeeper’s Tips for DIY Freelancers

Here’s my interview with Monica, a professional bookkeeper:

1. What are the most common bookkeeping mistakes freelancers (and other self-employed people) make?

Monica: The most common mistake I’ve seen is not keeping their books current. Most people wait until something is due (taxes, financial statements for loans, etc) and then try to put everything together hastily.

Another common mistake is not properly separating their personal transactions from their business transactions. They use the same checking accounts and credit cards for both personal and business transactions.

I’ve also noticed many self-employed individuals don’t keep all their receipts. You should obtain receipts for all of your business transactions including meals, gas etc. and not just large purchases.

2. What are the consequences of these mistakes?

Monica: Leaving bookkeeping to the last minute is very stressful. You also end up with a lot of inaccuracies when you do update you books. It’s a lot easier to remember what you did yesterday and today rather than last year.

It is better to keep personal and business accounts separate for two reasons. One, you don’t have to try and remember if a purchase common to both is for business or personal use. Two, it is better to have reconciled accounts in your books, and if the accounts are shared then you have to deal with twice as many transactions.

If you do not have a receipt for a disbursement that you’re claiming, and you are audited, the expense will be disallowed.

3. What is the most important tip to remember if I do my own books?

Monica: If you don’t already have an accounting background, you should take some kind of course that will give you a general idea of the accounting cycle and principles before starting your books. This will help to ensure your books are being done properly.

4. When should freelancers seriously consider hiring a bookkeeper and accountant?

Monica: If they do not have the necessary knowledge, then freelancers should definitely work with a bookkeeper and accountant. Also, when you become so busy that you no longer have the time to keep the books current, then it’s time to hire somebody else to do it for you.

I’ve noticed that most self-employed individuals give their books the lowest priority, thinking “I will do those when I have time.” I hear this all the time and then we end up with a shoe box of receipts and people panicking.

Freelancers should always consult an accountant for filing income taxes, and also if you are making a  major change in the way you are doing business.

Bookkeeping Benefits

Having an accurate record of your financial transactions is good for your freelancing business. With good bookkeeping, you can:

• Monitor the financial health of your business
• Create and stick to a monthly budget, so that you avoid cash flow problems
• Identify ways to cut down on costs and keep more of what you earn
• Prepare your taxes more easily, if you do them yourself
• Make your accountant’s job easier and possibly reduce the amount you pay for tax preparation
• Be ready for a tax audit, confident that you have all the documents to back up your tax forms

How Are Your Books?

As a part-time freelancer, I do my own bookkeeping and tax preparation. I used LessAccounting for about one year. It helped streamline the process of invoicing my clients, receiving payments and recording them. However, because I did not know anything about accounting, I soon found that I was doing many things wrong.

Finally, early this year, I switched to an accounting software that resides in my hard drive and decided to get serious with my finances. I worked with a bookkeeper to teach me how to record my transactions, customize the accounting software I’m using, reconcile my bank accounts, and deal with the fact that my transactions are in two currencies (US and Canadian dollar).

Since I will soon be freelancing full time, I expect that I’ll be hiring an accountant to do my taxes next year.

Another good option for freelancers is IAC-EZ. (Freelance Folder is fortunate to be sponsored by one of the best bookkeeping
platforms on the web, IAC-EZ.)

How About You

How have you been tackling bookkeeping and taxes? Are you a do-it-yourselfer like me? If so, what resources do you use to make sure you’re doing it accurately? And, how do you take the pain out of bookkeeping?

If you work with a bookkeeper and accountant, how has that experience been for you? How did you find the right professionals to work with?

Do share. You just might help another freelancer out.

PS: The Unlimited Freelancer has a list of many different financial software packages that are affordable and easy for freelancers to use. Check it out!

Image by TerryJohnston

Related posts:

1. When To Hire an Accountant
2. Open Thread: How Are You Handling Your Taxes This Year?
3. Introducing FreelanceFolder’s New Premium Sponsor, IAC-EZ

If you’re a freelance writer and you’re looking for work, Deb’s blog is definitely a site you want to explore. Deb’s also been a contributor at a number of other blogs (including this one) and has authored several eBooks.

It’s fun to look at a freelancing success story like Deb’s and admire her amazing accomplishments. But, how did Deb do it? What does it take to start with nothing and grow your own successful blog network?

In this post, Deb Ng has graciously agreed to share some of her tips and insights with us here at Freelance Folder. I’m sure that you’ll agree that freelancers of all kinds can learn from her story.

Five Insights From Deb Ng

I asked Deb five questions about freelancing, and here’s what she had to say:

1. First of all, can you share your story with our readers? How did you get started as a freelancer? What were some of the initial challenges that you faced?

Deb: Like most writers I always loved to write. I never considered writing for a living though, not at first. Working in publishing in the mid eighties put the idea in my head, but I never pursued writing because I didn’t think it would pay the bills. In the late 90’s I taught myself a little html and built an extremely primitive website where I posted my thoughts on everything from baggy pants to black lip liner. I didn’t know it then, but I was blogging. Writing every day was wonderful. I couldn’t wait to come home from work so I could update my website, which at first was only visited by family and friends but eventually I had a few “regulars”. After someone suggested I start submitting some of my humor pieces I began looking into freelance writing.

I landed a humor column with my first ever pitch. That isn’t to say every pitch was successful, but getting that first gig gave me the confidence to continue. As it didn’t pay too much I didn’t even consider freelancing full time. It was just a little extra shopping money. It wasn’t until 2002 when I was pregnant and we bought a house in another state that I decided to make an attempt at full time freelance writing. I was going to have to leave my job anyway, this would be as good a time as any.

I still had my humor column and I began to land bits and pieces here and there. My first sale was to The Dollar Stretcher, a frugal living website and newsletter. I landed what I call a “cocktail” of opportunities. I wrote for a few web content sites, maintained a newspaper column, submitted to online magazines and even took on some private clients. My goal was to earn enough to justify not having to return to an office job within one year, and I’m happy to say, I met that goal. Now I’m earning primarily from my own writing and don’t even have to take on client gigs if I don’t want to.

2. What one piece of advice would you give to the freelancer who is just starting out? What’s the most important thing for them to remember?

Deb: I think the most important thing to remember is not to get disheartened. Freelancing is an emotional roller coaster, especially when starting out. One client may love you while another sends rejection. Remember that it happens to everyone and it’s all part of the gig. Also remember that it takes time to build up a client base. You may not be able to find full time work after a week, or a month or even a year. We all have different experiences.

Finally, I’m learning from newer writers that they’re frustrated by the mixed messages. All the different freelance writing bloggers offer different advice and they don’t know whose advice to follow. I want to tell you that we all draw from our own experiences and none of us are right or wrong.

Take the assignments that make you feel most comfortable, at least at first. Don’t worry about whether or not one of the “gurus” agrees with you. As you gain experience you can break out of your comfort level. Follow your course for success, not someone else’s.

3. Most bloggers never turn a profit from their blogs, let alone build a blogging network. You’ve done both. What do you think was different for you?

Deb: Maybe it’s perseverance? I blogged every day for five years. On the days I can’t get content up, someone else did. Plus, I don’t only post news, or a rant or lists of links, in addition to the fun stuff, I write lots of useful evergreen content. I hope that in five years searchers will land on my pages and what I wrote will still be relevant.

I spent a lot of time researching the habits of my community. Once a year, I ask them to partake in a survey so I know what we’re doing right–and wrong. Plus, I thoroughly analyze all my stats. Knowing everything you can about your community helps you write the content they’re clamoring for and help you create traffic and monetization strategies.

I also think it’s doing so well right now because it’s a full time effort. I’m not handling client projects full time while blogging on the side. The blog is now the full time effort and I believe that’s the difference. I give my blog network my all, and it’s finally paying me back for my hard work.

3. With the explosive growth in the popularity of social media over the past year, do you think that blogging will continue to be as important to small business owners and freelancers? Or, do you think that a freelancer can market themselves with just a portfolio site and an active social media profile?

Deb: Personally, I feel face-to-face marketing trumps all. I’m not sure why this scares so many freelancers. My preference is for conferences and networking events where I can chat with potential clients and collaborators and build up more personal relationships. However, I think social media will probably become the most important marketing and networking tool for freelance writers in the years to come. I don’t know that blogging is as important to freelancers as it is for businesses that are trying to build up a community and buzz around their product or service. A website or online portfolio and Twitter and Facebook accounts are just as, if not more effective.

4. The web is constantly changing and freelancing is changing right along with it. If you could peek into the future, what do you think you would find? What skills do you think tomorrow’s freelancer will need?

Deb: Tomorrow’s freelancer will need combined skills, for example, web design and writing. Clients want one stop shopping, they don’t want to have to go to the mall. They want to be able to trust one person for a variety of projects.

5. Tell us about some of your current projects. What exciting things can we expect to see from Deb Ng in the next few months?

Deb: As you know, I’ve been working hard on my network of blogs at Freelance Writing Jobs. I’m proud to say I built a profitable blog network on my own with no backing or venture capital. I regularly contribute to the BlogWorld, New Media Expo Blog, and ProBlogger. I have two ebooks in the works, “The Freelance Writers Guide to Social Media” and “Niche Blogging for Fun and Profit.” Finally, David Peralty and I have started HireVine. A job board for social media types…oh and Chris Garrett and I are also discussing a collaboration–and it’s a good one. I guess you can say I’ve been keeping busy.

Your Turn?

What have you learned from Deb Ng’s story? If you could ask Deb one thing, what would it be?

Share your thoughts in the comments.

Related posts:

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2. How to Get Started with Twitter Lists
3. Five Ways to Better Engage Readers on Your Blog

Thankfully, this variety and quality hasn’t changed, but today I want to mix things up a bit and get advice from other sources. I have taken the time to contact some of the most successful freelancers I know and ask them for any valuable advice that they would like to pass on to other freelancers. In this post, I’ve compiled and arranged all of their advice for you.

I had originally planned to ask more people, but the advice shared here is absolutely packed with detail and value that I think more would have been entirely unnecessary. The following tips are in no specific order; everyone involved has shared some great words of wisdom.

Enjoy…

Cyan Taeed

Who: Cyan is one of the founders of the Envato network and currently operates as the Marketplace Manager. She and her team first started with a site I’m sure you all know, Freelance Switch, and have now grown host to over 19 websites which include PSDTuts and Blog Action Day.

Wisdom: “The reality is that some, if not most clients don’t know if your work is any good. They do know how you make them feel. As a graphic designer, I realized that a lot of the time a client didn’t have much idea of the quality of my work. What they did know was that (most of the time!) I was enthused about their project, I bought them their favorite coffee when I came to see them, I was confident, and I got the project in on time. Now of course I didn’t always hit these marks, but I realized that if I ticked these boxes the client was almost always very happy, and often the actual work I produced became less important.

Now does that mean that one should not bother to do the best work possible? Of course not. You should always do the best work you possibly can and the bigger the client, the more likely they’ll know their stuff and recognize the quality of your work. You always need to do your best work because you never know who will see it and take you on for that dream project. But for your little mom and pop style client who are the bread and butter for so many of us, never underestimate the power of a positive experience. Often for them this will be far more important than the actual work your produce.”

Chris Garrett

Who: Chris hardly needs an introduction, since he has been a regular writer here at Freelance Folder. He is the co-author of ‘Problogger: Secrets for Blogging Your Way to A Six-Figure Income’ and is also a successful blogging and internet marketing consultant.

Wisdom: “It is hard to give one piece of most important advice because, as you know, there is so much involved. I would say though the most important factor in a freelancers success is the old adage “it is not WHAT you know but WHO you know”.

This translates to having an excellent network, both in terms of reach and in terms of quality. You need to be in touch with connectors, people who can refer work to you, help you when you are stuck, mentors, advocates, potential clients, marketing outlets — you name it.

Build your network before you need it. Social media is an excellent way to develop this network, so get active. Do not just go asking for stuff, be generous with your time and expertise. Give first. Create content, answer questions, do free work for people you like. Any time you do some work, get them to provide you with testimonials and referrals.

With a good quality network backed by excellent product and stellar customer service you will never be short of work.”

James Chartrand

Who: James is one of my favorite writers, sharing his words and his services via Men with Pens. He has managed to build a successful business which includes three other team members offering solutions from website design right through to copywriting.

Wisdom: “Freelancing is hard — really freakin’ hard. Sure, it offers a lifestyle of more freedom, more fulfillment and more satisfaction, but there are some tough knocks that every freelancer eventually has to take along the way.The most important advice I can give anyone – new freelancer or seasoned expert – is to be ready for them, be prepared and stay focused on your dreams. Your determination is going to be the most valuable resource that no one can take away from you, so hang onto it tight.When you’re determined, you can’t be shaken from your goals. You know where you want to be, and you have the confidence to make it. Your determination gets you past a bump in the road, a hitch along the way or maybe even around an obstacle. It’s the strength you can tap into any time you need it.

So find it, seize it… and get out there to make the life you want happen.”

Bojan Stefanovic

Who: A few of you may not be aware of Bojan, but you may have seen his work. He is one of the most talented designers I know and runs a very successful solo business, Logoholik. He also created the branding for one of my own websites which was featured in a popular, published book.

Wisdom: “Apart from usual: Be an optimist. Practice. Create. Be active. Be honest. Believe in yourself. Follow your passions. Make mistakes. Learn from them. Underpromise. Overdeliver.

I will add: use every possible way to show your potential clients that you are active in your industry. Use social media tools to find new clients (a good portfolio from past work is not always that breaking point to catch that promising new client. They love to see you in live action too!)”

Liz Strauss

Who: Liz was described by EatonWeb as one of the most influential bloggers online today. You’ll see why by spending just a few minutes on her site. She is the founder of the successful SOBCon and currently works with businesses (and individuals) to help them understand and benefit from the social web.

Wisdom:“Now, more than ever, trust is what wins the game. Great freelancers make it easy to see that work I hand over will be done with more care and expertise than I could invest myself. The best freelancers

• Show competence. They don’t apply unless they have the skills needed to complete the work successfully.
• Have credibility. What they say resonates with truthfulness. Great freelancers know their skills and talents and can talk about them with quiet confidence. They don’t display false humility nor do they oversell their abilities.
• Are relational. Their discussion of past work or current projects has a generosity of spirit. They understand that being good is only half of it and that being easy to work with is just as important.
• Are trustworthy. Great freelancers take responsibility for what they do. They do their best to understand the project goals so that they can make the same judgments and decisions the hiring manager would. A great freelancer invests in the same ways a full-time employee does.
• See the bigger picture. In that same vein, great freelancers want to know where their piece of the project fits into the bigger picture so that they know which issues they encounter are worth reporting back and which can be ignored.

In these ways, the freelancers that win every time take the thinking and worrying about that work off my desk and let me know I can work on other things without fear of letting that part go. Even the newest, least experienced freelancers who can demonstrate they are competent, credible, relational, trustworthy, and aware of the big picture will soon be in constant demand.”

David Airey

Who: David was mentioned on a previous post of mine recently for being someone who has used blogging to really stand out in his niche. David is a successful designer who tends to focus on logo work and is currently working towards completing his first book

Wisdom: “Be humble. No-one likes a cocky git. Ask questions too. People are most comfortable when talking about themselves, so show a genuine interest and build some rapport. Remember, it’s people we do business with. Not companies.”

 
Over to you guys: What do you think of this type of post? Would you like to see another collection including more freelancers?

Do you have any advice to add from your freelancing experience? I’ll see you in the comments…

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1. 10 Hidden Skills of Successful Freelancers
2. Elements of a Successful Project Proposal
3. How to Become a Successful Freelancer When You’re “Different”

Hey everyone! Today we have an interview with Liam McKay of Function – Web Design and Development. I’ve had the pleasure of connecting with Liam on multiple occasions both via his design blog and also via Twitter and I’m very happy Liam accepted the invitation for this interview! Hope you like it!

Jon: Hi Liam! First I’d like to thank you for taking the time for this interview. Can you tell us a little about yourself, what you do and where you’re from?

Liam: I’m a 19 year old lad from a city in the middle of England called Coventry. I’ve recently set up a blog/design company called Function. My role there is basically to keep things running and run the design side of things. I’ve been designing for a few years but only started to look at is as a serious career about 2/3 years ago. I had a job as a Junior Web Designer for a local company, but recently decided I would give freelancing a try; And so far so good!

Jon: Some time ago you launched Function, a design blog and portfolio site (which kicks some serious asses in my opinion). Why did you decide to start a blog? And also, why have the blog on the homepage instead of say your portfolio or list of services?

Liam: Function was the beginning of me sort of “reinventing” myself, and my style. I’d got a little bored of designing the kind of sites I’d been making, while I didn’t think what I was making was bad, I just always wanted to push things further and experiment more, and function gave me sort of a place I could escape and just let loose. 

The reason I decided to run a blog is because I felt that it gave people a chance to get to know me better, and better understand the things which make me tick and the kind of things I like, something which doesn’t really come across in a portfolio site.

Jon: What are your goals with Function? How do you plan to use this website to attract clients?

Liam: My goal for the blog was really to give myself a voice in the design world, I wanted a way of networking with like-minded people and being able to showcase my work and sharing some of my inspirations. I’ve already met a lot of great people and some clients that I wouldn’t have had the chance to talk to otherwise.

 
I’m thankful for the design community for really getting behind me and my blog so soon, and in a short amount of time I’ve already had the pleasure of working with great people such as Danny Outlaw, Adii & Collis Ta’eed.

Jon: Did you study anything in particular like arts, design or programming? Or are you self-taught?

Liam: Most of what I know was self taught, it was never really my intention to be a web designer. I just started out playing around in Photoshop and soon found I could make some “great” (they were in my mind) Web Designs with it. As I wasn’t the best at school with things such as Maths and Science I knew that I wanted to be doing something practical for my job, and as the last year of school came and it was time to figure out what I wanted to do with my life, I decided that I would go on a Multimedia course at college.

 
We covered everything from video & audio production to typography and art, but it was the web design projects that I was most interested in, and that’s when I realized what I wanted to be. College was a great place for me to polish some of my techniques and of course get a qualification which would help me get a job doing what I now loved.

Jon: What are the tools you simply couldn’t live without? Whether it’s an image editing software or an accounting app, we wanna know :)

Liam: I like to keep things simple I don’t really use many tools; Photoshop & Firefox will usually get me through most days. But I really love the array of tools available on Zoho – Everything from spreadsheets, databases, Project management software to invoicing etc.

Jon: Do you find clients through your blog and/or you use job boards or classified ads websites?

Liam: Well most of the clients I’m working with at the moment are on a ongoing basis; so I’m quite busy getting repeat work from the few clients I have at the moment. I’m really happy to have got this regular flow of work sorted so early in my freelance life as it means I don’t need to worry too hard about finding clients too much at the moment. I still get emails coming in about new projects and I’m always happy to make time for new projects, but there seems to be enough for me to do at the moment without having to look elsewhere for additional work.

Jon: What would be your best tip(s) for someone who is just getting started?

Liam: Network! Building up a network of people who have similar interests to you is always a good tip to get you started. In the months before I launched I started to build a network, and build some interest in what I was doing just by showing some samples of work on my blog. Networking has brought some great opportunities my way and I’m sure it will continue to.

Jon: What internet personalities influence(d) you the most? Who would you say are your ‘idols‘?

Liam: I never really had any influences when getting into design, but the people who influenced me to start blogging and working freelance would be Danny Outlaw & Anthony Zinni – I’d never really followed a blog before until I started reading the blogs of these guys, I was impressed with what they were doing and saw that a blog was an ideal way for a designer to connect with other designers.

 
They really opened my eyes to the design world and as a result of reading these two blogs I soon discovered many more and was quite overwhelmed by just how many people blogged in the design world, but I think that’s a great thing as it means theres always something new to read, always something going on, always something to aspire to and push you as a designer.

 
Two people I really admire mainly for their entrepreneurial skill would be Adii & Collis Ta’eed. They really seem to have a great understanding of some great ways of using their skills to make money. My main goal is to build up a network of websites & products one day, but for now I’m over the moon at just having the opportunity to work with such great minds, and hope to learn a lot from working with them.

Jon: What’s in your Ipod? And if you don’t have one, why?

Liam: One band who take up a good % of the space on my iPhone is The Prodigy, they’ve always been played at my house since I was about 6 years old. I don’t think I’ll ever like a band as much as these guys. You really have to play it loud to appreciate just how good they are. I’m also a big Coldplay fan, and find their most recent album amazing to work to! (Seriously try it) I really get in the zone when I have that album playing.

Jon: Thanks a lot Liam for taking the time out of your busy schedule to do this interview! It’s really appreciated! :)

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Jon: Hi Adelle, can you please tell our readers a little about yourself, where you’re from, what you do?

Jon: Have you studied anything in particular or are you self-taught? What’s your background and how did you get started?

Jon: You have your own portfolio site (adellecharles.com), did blogging on Fuel Your Creativity helped you get new clients? How did blogging helped your design business?

Adelle: Funny that you ask that – I have been thinking about that for a little while. When Fuel Your Creativity started out about 6 months ago, I had no intention of ever mixing my portfolio with my blog. The main purpose of my blog was to help others “fuel their creativity” and engage with other creatives in the community, to network and to get my name out there as a blogger. I never thought twice about getting my name out as a “designer“. Strange as it may seem!  I’ve been thinking about incorporating the two more and have been working on a site design (fuelbrandstudios.com) hopefully set to launch by January – maybe sooner.

Jon: Please tell us, what are the tools you simply couldn’t live without? (software, web-app, etc…)

Jon: What would be your single best tip for people looking into a graphic design career?

Jon: Do you have any idols or mentors in the graphic design field? People you look up to and that inspire you, who are they and why do you like them and their work?

Jon: You already have over 8 years of design experience, but where do you see yourself in, let’s say another 5 years from now? Do you have some sort of exit strategy, or you can see yourself designing and working in this field for years to come?

Jon: The infamous question: Mac or PC?

Jon: Now the question I have to ask everyone I interview: What’s  in your iPod? :)

Jon: Thank you so much Adelle or taking the time to do this interview, really appreciated!:)

Jon: I hope you enjoyed this interview with Adelle. We will have more interviews soon, if you know someone who you would like us to interview, drop us a line.

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2. Open Thread: Who Would You Like Us to Interview Next?
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