Tales of a Freelancer: Finance


Most freelancers in the creative field would say that finance is where they feel most uncomfortable however it is unavoidable and essential to your business running. So I thought today I would share some tips or practices I have learnt over the years in the hope of opening up the discussion and hopefully helping some of you.

With that being said, I am not an accountant or a financial advisor. This blog post include all things I have learnt and is general in nature without taking into consideration your business or circumstances. I would highly recommend you speak to a professional when starting your own business, they are invaluable.

Separate your business & personal finances from day one.

This would be my 1st piece of advice for anyone with their own business/side hustle etc. Open a new bank account and get a new card straight away, have your business expenses come out of that account and have your invoices paid into that account. Firstly, this makes it just a whole lot easier when it comes to tax returns, bas statements to have these separated so you aren’t filing through the accounts working out what is ‘business’ and what is ‘personal’ Secondly, all that money is not your money and the more you set up boundaries that show that the better. You will most likely have to pay a bunch of tax, not only personal income tax but also GST and you will feel a lot less shitty about that if it isn’t coming out of money that you see as already being yours. If you want to be extra organised, you can transfer your calculated income tax & GST into another bank account all together.

When you can, take deposits for work

As a freelancer, I think one of the areas we really lack in worker rights is in payment and timely payment. I would highly recommend any freelancer take a deposit up front, and clearly state your payment terms prior to commencing work. It isn’t always possible but getting a deposit means a) you work out how serious the client is and it can lock them into timelines and b) it may mean you are able to have a more steady income because you won’t have to wait until the client signs off for you to get one lump sum.

Finances can be daunting, but ignorance is not bliss.

Honestly, keeping track of your finances and at least knowing what is coming and going is so empowering. Find a way that works for you. If you can create a simple Excel spreadsheet, or you need something like XERO or even you need a personal accountant monthly. Find something that works for you and means that you are able to understand the basics. I don’t feel the most stressed when my clients don’t pay invoices on time, I feel the most stressed when I don’t know what money I have made or not made this month. The not knowing for me is where my fear lies so I know it is important for me to keep a close eye on things so that I can sleep at night.

Your invoices aren’t your income, yet…

I think it is easy to get your paid invoices and your income mixed up. You get paid, that is your income right? Nope. You work out your pay from your invoices. Your income is actually your invoices minus your expenses minus your GST & minus your Income Tax (you can calculate that here). If you want to be a good behaved freelancer you could also be taking out 9.5% for your super & extra for university loans. I would suggest that only after you have worked out how much you get paid from the invoices each month that you actually pay yourself. Paying yourself prior to working this out can be dangerous and mix up your finances.

Paying tax can feel shitty, but it isn’t your money.

I don’t think I have met a single person who loves paying tax. As a self employed person it cuts a little deeper instead of it coming out little by little it always feels like big chunks at the end of the quarter or worse, the end of the financial year. However, I really do think changing your behaviour with handling your own tax makes it an easier pill to swallow. By separating your business and personal finances and only paying yourself into your personal account AFTER your taxes have been calculated, you don’t feel the hit as hard. Where as if you had all of your personal and business money in one account and you paid rent that week and you also had a10k tax bill taken out that may send you into a meltdown. Separating your finances and putting away each month for tax means tax time becomes less of a personal attack on you and more of just another business expense.

I was considering designing an excel template that could help freelancers generally in organising their finances. If this is something you would be interested in, let me know and I can explore it further…

With Love, Jasmine