5 Personal Financial Tips for Freelancers

Being a freelancer comes with a lot of perks. However, it also comes with many responsibilities. From the financial side of things, you have to be prepared to handle all of the nuances involved with managing your money.

Mastering Your Money as a Freelancer

Freelancing offers a wealth of opportunities, freedoms, and benefits that you simply don’t have access to as a W-2 employee working a 9-to-5 job for a large corporation. 

You’re basically able to set your hours, choose your clients, and build the kind of business you want. But to be successful, you also need to manage your finances well and make sure you’re setting yourself up for long-term success.

As you think about managing money as a freelancer, here are several helpful tips to keep in mind:

1. Open a Separate Business Account

If nothing else, make sure you follow this first tip. Open separate checking accounts for your personal use and business use. This is extremely important and will make accounting so much easier.

When you have a business account, everything runs through it. This includes every business expense and all earnings. This allows you to reference one set of statements when balancing your books or filing taxes. 

It also protects you. If you run an LLC, you’re required to have your own dedicated account. Even a single personal transaction on your business account (or vice versa) can do what lawyers call “pierce the veil” and compromise the integrity of your LLC.

2. Build an Emergency Fund

When you’re a freelancer, you have to plan for peaks and valleys. Unlike a salaried employee,  you can’t count on the same consistent paycheck month after month. Some months will be feast and others will be famine. One way to account for these fluctuations and protect your family’s finances is to build up an emergency fund. 

An emergency fund is basically three to six months of cash reserves that you set to the side in case you need it. It’s like a cushion that you can access when there’s an emergency or bill that you can’t pay. (The key is to fill the emergency fund back up as quickly as you can after drawing from it.)

3. Keep Budgets

Budgeting may sound boring, but it’s necessary. Be meticulous about keeping budgets in both your personal life and business. You’ll have to decide what kind of budget you want to keep, but it’s a good idea to build what we’ll call a “reflective budget.”

A reflective budget is a budget that’s built on the previous month’s income (it reflects what you earned in the past). In other words, if you made $10,000 in May, you use that as your top-line budget number for June. Then if you make $7,000 in June, you budget $7,0000 for July, etc. When you use this approach – as opposed to one that projects your future earnings – you ensure you’re always budgeting correctly down to the penny.

4. Know Your Options

Make sure you know your options when it comes to things like financial relief and bankruptcy (should you find yourself in a situation where you’re struggling to keep up).

“Most freelancers don’t realize that if you’re a sole proprietor – meaning you and your freelance business are legally the same entity – you may actually have access to both Chapter 7 bankruptcy and Chapter 13,” bankruptcy attorney Rowdy G. Williams says. “But if you have an LLC, Chapter 11 is your only option.”

Hopefully, you don’t reach a point where you need to explore bankruptcy, but it’s nice to know there are always options. 

5. Pay Quarterly Estimated Taxes

As a freelancer, there’s nobody taking taxes out of your paycheck each month. This means you are 100 percent responsible for paying your own taxes. And guess what? The IRS doesn’t want you to wait until the following April to settle up. They want their taxes along the way.

Freelancers are required to pay quarterly estimated tax payments. You can find the IRS schedule here. Meet with your accountant to figure out a plan. However, as a general rule of thumb, you’ll want to set aside roughly 25 percent of your monthly earnings for estimated taxes.

Set Yourself Up for Success

It’s not enough to bring on a new client or close a new deal on a high-ticket project. In order to be successful as a freelancer, you have to master the art of managing your finances and maximizing your earnings. Let this article nudge you in the right direction, but never underestimate the importance of partnering with the right financial professionals and advisors!

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Doing a Small Business on the Sideline: Smart Tips to Consider

Starting and running a small business can be incredibly rewarding, but it also comes with challenges. One of the biggest challenges is making sure your business is both profitable and sustainable. Ensuring profitability can be especially difficult if you’re not able to generate a lot of revenue right away, but these smart tips for small business owners may help.

Set Your Business Up For Success

With proper planning and preparation, you can set your business up for success.

One of the first things you’ll need to do is choose a business structure. You’ll also need to obtain the necessary licenses and permits for your business. Depending on the type of business you’re starting, you may need to get a local, state, or federal license.

Finally, creating a business plan is a must. This document will outline your business goals, strategies, and how you plan to achieve them.

Create A Sustainable Business Model

Once you’ve taken care of the administrative tasks, you’ll need to focus on creating a sustainable business model. This means finding a way to consistently generate revenue and profit.

One of the best ways to do this is to focus on creating repeat customers. You can encourage customer loyalty by offering quality products or services at a fair price. You can also implement a loyalty program or offer discounts for repeat business.

Another way to generate revenue is to diversify your income streams. This means creating multiple sources of income, so if one stream dries up, you have others to fall back on.

For example, you could sell products online and in brick-and-mortar stores. You could also offer services such as consulting or coaching.

Make Sure Your Business Is Profitable

Once you’ve created a sustainable business model, you’ll need to make sure your business is actually profitable. This can be tricky, as there are a lot of expenses that go into running a business.

One way to ensure profitability is to keep your overhead costs low. For example, you could negotiate better rates with suppliers or rent office space in a shared co-working space.

You can also boost your profitability by increasing your prices. Raising prices might not be possible with all products or services, but charging a premium goes a long way toward making your business more profitable.

Of course, you’ll also want to make sure that you’re generating enough income to cover your expenses.  When you have to handle my invoices, try an invoice generator for help. Utilizing a reliable invoice generator can enhance your business operations by streamlining the invoicing process and reducing overall operational expenses. 

If you need to source business capital and have many outstanding invoices, consider invoice factoring.

What Is Invoice Factoring?

Invoice factoring is a financing solution for small businesses that allows you to sell your unpaid invoices to a factoring company at a discount to the invoice value. Invoice factoring can provide you with the same-day funding you need to support your operations and grow your business.

Why Is Invoice Factoring A Good Option For Small Businesses?

There are several reasons invoice factoring can be a good option for business owners:

  1. It’s a flexible financing solution.
  2. It’s a relatively quick and easy way to get funding.
  3. It can provide you with immediate cash flow.

How Does Invoice Factoring Work?

Invoice factoring is also known as invoice financing. The process is relatively simple. First, you submit your invoices to the factoring company. Then, the invoice factoring company provides you with an advance on the invoice amount. Once your customer pays the invoice, you will repay the advance plus a small fee to the factoring company. Factoring companies typically advance you up to 80% of the invoice value. The factoring company assumes the risk of non-payment, so you don’t have to worry about it.

How Can You Find The Best Invoice Factoring Company?

First, to find the best factoring company for your business, you need to be certain the company is reputable and has a good track record. Second, you need to do some research to find out whether the company offers competitive rates and fees. And third, make sure the factoring company can provide the level of customer service you need.

Alternatives To Invoice Factoring Companies

If you’re not sure if invoice factoring services are right for your business, there are a few alternatives you can consider when you need business capital.

If you have the savings to cover the costs of starting your side hustle, then using your own money is often the best option. If you choose this option, you don’t have to worry about making payments or accruing interest. However, using your personal savings puts you at risk of losing money if your business fails.

Taking out a bank loan is another popular option for financing a side hustle. Business loans can give you the cash you need to get started without risking your personal finances. However, loans also come with monthly payments and interest charges that can add up over time. If you’re considering this option, be sure to check for hidden fees.

Accounts receivable financing is another option to consider if you need funding for your business. Accounts receivable financing is similar to invoice factoring, but the funds are based on your accounts receivable rather than invoices.

Finally, another option is to look for investors willing to finance your side hustle. Getting investors can be a great way to get started without incurring any debt. However, it’s important to remember that giving up equity in your business means giving up some control. Choose this option carefully, and make sure you’re comfortable with the terms.

The Bottom Line

If you’re thinking about starting a small business on the sideline, an invoice factoring service can be a great option. It’s a flexible financing solution that can help you improve your cash flow and business financials.

For more tips for small business owners, read How To Get A Small Business Off The Ground.

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How To Get A Small Business Off The Ground

Are you looking to get started with your small business? There’s a lot to consider when starting, which can be overwhelming. Luckily, we’ve broken it down for you so that it’s easy to understand and implement.

In this guide, discover the most important things to check off to start your own company.

1. Develop a Successful Pitch Deck

When you start your company, you’ll need to secure funding. One way is through investors, which allows you to limit how much you put in initially out of your pocket. But how can you ensure that investors see things the same way you do?

Successful pitch decks are essential to presenting your business to investors. How well planned your presentation is directly correlated to how likely you are to secure investors. Don’t waste the opportunity to get ahead with a poor presentation when you could deliver something truly engaging.

2. Find a Location

When choosing your business location at a start-up, there are many factors to consider. Can you support yourself with temporary establishments like market stalls, or do you need a more permanent address? Consider where your suppliers are located and where you can store excess goods.

Where will employees work from? Will they need office space, or can they be productive working from home? These are essential questions to ask yourself when looking into potential locations for your business to bloom.

3. Create a Name

Your company’s name needs to be memorable and related to what goods or services you’re providing. It needs to be something you can stick with, as changing your business’s name and rebranding can confuse customers. Having the right name that will stick in people’s minds will help you grow your brand over time.

Get creative, but don’t be too abstract. You want the name to be easy to remember, so people think of your company first. The primary goal of a great name is to generate buzz and customer loyalty that will take your business to the next level.

4. Register Your Business

You’ll need to decide on a few details before registering your business. Determine what type of business structure you’ll operate and what permits you’ll need to get started. Will you run with a sole proprietorship, partnership, or run a corporation? There are pros and cons to all options.

Take your time to understand all the legalities of running a company and what agencies you’ll have to work with. Federal, state, and local government agencies will need specific applications so you can operate your business. Once they’re taken care of, you can get started and spread the word about your new business venture!

5. Business Insurance

Protect yourself with business insurance right away. Don’t wait for disaster to strike and find yourself unprepared. Business insurance protects you from several situations you may face, like personal injury and property damage. There are certain protections against vandalism and weather as well.

Research the risks you face at your location, and regularly reassess those risks as your company grows. The needs of your business are sure to change, and thankfully your insurance policies can accommodate those changes if you’re proactive. Discuss your options with a reputable licensed agent so that they can find you the best deal.

Jumping into Business Ownership

Starting a new company is a complicated process, but it becomes a lot simpler once you break it down into a few steps. From researching how to create a powerful pitch deck to securing your company’s location and paperwork, you’re setting yourself up for success every step of the way.

Don’t let the unknown stop you from achieving your entrepreneurial ambitions. Take it a day at a time, and follow these steps to create a strong beginning for your company.

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Mailchimp vs EngageBay vs HubSpot Which software tool is good for small business?

You can use email marketing to communicate with leads, nurture customer relationships, and generate new sales. If you’re looking for an email marketing platform for your small business or start-up, you’ve probably reduced your choices down to three: HubSpot vs Mailchimp vs EngageBay. You’re having difficulty deciding which platform is best for you. What kind of Mailchimp campaign can you create with their platform? How much does Engage Bay cost? We’ll help you to find a leader in the duel around Mailchimp vs. ActiveCampaign vs. EngageBay in this post. To do so, we’ll go through the features, cost, and advantages and disadvantages of each of these three email marketing platforms. Analyze their features to identify which product is best appropriate to your business requirements. In general, any business software should allow you to see the big picture while still allowing quick access to the details.

1.EngageBay:

EngageBay is the first in our comparison between Mailchimp vs HubSpot vs EngageBay. Engagebay is a software service that enables its customers an all-in-one marketplace that includes sales & marketing, CRM, and customer service tools. Despite being formed in 2017 and having a slew of strong competitors, EngageBay has carved out a niche for itself. When other firms limited their CRM services to big companies. Engagebay was giving a great bargain on CRM for small businesses and start-ups. Engagebay is a cost-effective, easy-to-use, easy-to-implement platform with numerous integration options and an automated nature. 

Pricing:

Engagebay offers four different packages.

  • Version that is freely available
  • 1000 contacts and 1000 branded emails would be sent to users.
  • Basic Version
  • The basic version charges 8.99 dollars per month per user.
  • Customers will receive ten thousand branded emails and fifteen thousand contacts.
  • For all of your questions and onboarding requirements, there will be a customer support team.
  • Growth Version
  • The monthly cost of the expansion version is $29.99 USD per user.
  • This program contains 50000 contacts and 25000 branded emails.
  • For your onboarding and inquiries, we have a dedicated customer support team.
  • Pro Edition
  • The Pro version costs 47.99 USD per month per user.
  • This plan includes 50000 branded emails and limitless contacts.

Pros:

  • It’s simple to use, implement, and integrate!
  • When we ask for an update, they are quite prompt. Very quick to respond. A really nice group of people. It’s simple to use.

Cons:

  • Even though they are always glad and prompt to help, the training manuals could be better. Some of my concerns are general and should have been covered in a manual/video.
  • It isn’t exactly a drawback, but it would be better if they added more CRM tools. We won’t have to use any extra CRM software as a consequence of this.

2.Mailchimp:

Mailchimp was just rated #8 on G2’s global list of the Best Software Companies of 2020. It provides a perfect marketing platform for small businesses, with everything from CRM functionality to tagging and segmentation, predictive demography, and more. For customer signups or introducing new products, the platform also includes a form builder, websites, and landing pages. You receive the powerful capabilities you want and need with less hassle with Mailchimp than with alternative marketing systems. You’ll be capable of transforming insights into action because you’ll be able to store all of your audience data in the same place you execute all of your marketing.

Pricing:

In EngageBay vs Hubspot vs MailChimp, it’s important to note that MailChimp is one of the oldest and most reliable names in CRM and automation. You can manage up to 1000 contacts for free on this platform before starting to pay depending on the quantity of subscribers you add to your list. The cost can then be hiked to $10 or $25. The greatest feature about this platform is that its templates are simple to use, and the framework itself allows you to customize your operations to your specific requirements.

Pros:

  • The “free forever” plan is indeed a generous (but feature-limited) solution.
  • The editor is easy to use, and creating campaigns is a pleasure.
  • There are several integrations, guaranteeing that there is something for everyone.

Cons:

  • Paid plans are cost prohibitive (especially if you have a large email list and need advanced features)
  • Marketing automations aren’t as feature-rich or consumer friendly as other solutions.
  • Pre-built automation processes are available at reasonable libraries.

3.HubSpot:

HubSpot is a sales and marketing marketplace wherein different types of clients assemble. Customer relationship management (CRM), lead management, tracking, categorization, and seamless sales closing are all included. As the name implies, it is a location where all marketing departments come together in one place to improve productivity. It provides a variety of products to its customers, with the primary goal of consolidating all types of inbound marketing and sales for peak effectiveness. In the year 2006, Brian Halligan, an American software developer, and Dharmesh Shah co-founded the company.

Pricing:

  • HubSpot CRM is a free service.
  • HubSpot CMS Hub – $300/mo for Pro, $900/mo for Enterprise
  • HubSpot Marketing Hub is available for free, with a Starter plan costing $45 per month, a Pro plan costing $800 per month, and an Enterprise plan costing $3,200 per month.
  • HubSpot Sales Hub is available for free, with a Starter plan costing $45 per month, a Pro plan costing $450 per month, and an Enterprise plan costing $1,200 per month.
  • HubSpot Service Hub is available for free, with a Starter plan costing $45 per month, a Pro plan costing $360 per month, and an Enterprise plan costing $1,200 per month.

Pros:

  • HubSpot is a high-priced choice.
  • HubSpot has an onboarding charge.
  • To join up with HubSpot, the consumer must go through an annual commitment process.

Cons:

  • While HubSpot’s content staging tool lets you redesign and relaunch your website in a sandbox development environment, it’s only for website pages and landing pages.

• HubSpot’s tags are universal, which means they’ll function on any blog. This is excellent if you only have one blog in one language; but, if you have two, three, or even four blogs (all covering various topics), the tags would not translate well (unless they are proper nouns).

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