When you’re self-employed, planning ahead can feel impossible. Being wrapped up in the here and now – completing work, conversing with clients, balancing your books – yields immediate success. Nonetheless, you need to make time to look to the future.
Invariably, freelancers that don’t forecast find themselves entangled in all kinds of financial webbing. The solution, gladly, is a simple one. Clearing your schedule for a single day (or perhaps even a couple of hours) to knock up a financial plan won’t damage your business. On the contrary, it’ll help you to enjoy a superb 2018.
We’re perilously close to the new year now, so we’ve come up with a few tips to help you get started on assembling your next financial strategy.
Step 1: Calculate your ins and outs
First thing’s first, look back over all your ins and outs for the past year of trading, and use these to determine a suitable budget for the year ahead. Your accountant can help you work out a cash flow projection to produce a realistic twelve-month forecast.
One snag, of course, is that clients can realistically come aboard or fall away at any time. To relieve this uncertainty and give your financial plan some added clout, draft a proposal to long-term clients suggesting they sign on for a retainer in the new year. This way, you have a steady supply of work and income right from the start of 2018.
Step 2: Work out your entitlements
A lot of freelancers aren’t acutely aware of the different types of expenses they are entitled to given their self-employed status. Running a business by yourself gives you license to claim back on things like office materials, electricity, travel, business premises, and much more.
By taking stock of your expenses, you can work alongside your accountant to build a more accurate budget. If your calculations are precise, it will paint a clearer picture of available funds and highlight potential opportunities to grow, expand or invest.
Step 3: Consider tax and emergencies
Everybody has different tax liabilities, and it’s worth putting aside an adequate pot for your own. You can use your financial projections to gauge how much tax you might be liable for, and then tweak figures accordingly throughout the year. Using specialist accountants and accounting software can ensure this remains an accurate and stress-free process.
Last but not least, it’s always worth stocking up an emergency fund. No matter how well you prepare for the upcoming year, there’s simply no way of knowing what might befall your business. If you have a cushion to fall back on, though, you’ll remain afloat even in the stormiest of financial seas.
Creating a detailed, accurate financial plan for 2018 is considerably easier when you have an expert guiding you every step of the way. Get in touch with Bright Ideas Accountancy for a free consultation, and we’ll show you how to build a self-employed financial strategy that promises the best chance of success.
