Comments on: Accounting Basics for a Freelancer http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/ Freelance Advice and Freelance Jobs - FreelanceSwitch Thu, 24 Jul 2008 18:16:35 +0000 http://wordpress.org/?v=2.5 By: Brad Apling http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-25162 Brad Apling Tue, 08 Jul 2008 23:39:14 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-25162 I think the main points to be taken away from both the article and the comments are: *Pay attention to your business financials whether you have an accountant or an accounting package. You are still responsible for knowing what goes on. *Keep a daily/weekly track of all your expenses including your bank/business accounts in the most efficient and safe manner that works for you. Always know where you stand. *Have another person you can trust with a financial or tax background review your books just to make certain everything appears in reality for what you think they represent on paper (hard or soft). *Always have a backup of your accounting books (whether hardcopy, softcopy or online) and store outside your residence for 'just in case'. Everyone has their own preferred method. It all depends on your platform (pc/mac/linux) and where you work. For those new to having a business, take the time to do the research, ask the questions, see what works for others; but make your own decision on what will be easy to maintain and dependable for you in managing your own business. After all, it is YOUR business that you are starting/maintaining/growing. I think the main points to be taken away from both the article and the comments are:
*Pay attention to your business financials whether you have an accountant or an accounting package. You are still responsible for knowing what goes on.
*Keep a daily/weekly track of all your expenses including your bank/business accounts in the most efficient and safe manner that works for you. Always know where you stand.
*Have another person you can trust with a financial or tax background review your books just to make certain everything appears in reality for what you think they represent on paper (hard or soft).
*Always have a backup of your accounting books (whether hardcopy, softcopy or online) and store outside your residence for ‘just in case’.

Everyone has their own preferred method. It all depends on your platform (pc/mac/linux) and where you work. For those new to having a business, take the time to do the research, ask the questions, see what works for others; but make your own decision on what will be easy to maintain and dependable for you in managing your own business. After all, it is YOUR business that you are starting/maintaining/growing.

]]> By: R. Stacy Cook http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-24145 R. Stacy Cook Wed, 25 Jun 2008 17:25:15 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-24145 I wanted to add one more web based software to your list... http://positiveware.com They offer a 30 days trial and were very helpful in getting us up and running. We were saving time and money the first day. I wanted to add one more web based software to your list…

http://positiveware.com

They offer a 30 days trial and were very helpful in getting us up and running. We were saving time and money the first day.

]]> By: Accounting Basics for Designers | Outlaw Design Blog - A Graphic Design Blog http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-23655 Accounting Basics for Designers | Outlaw Design Blog - A Graphic Design Blog Mon, 16 Jun 2008 09:22:47 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-23655 [...] recently read a great post on Freelance Switch about accounting basics. Its is a great article and certainly worth a look, you can read it here. While the article covers [...] […] recently read a great post on Freelance Switch about accounting basics. Its is a great article and certainly worth a look, you can read it here. While the article covers […]

]]> By: pligg.com http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-22458 pligg.com Tue, 20 May 2008 06:30:55 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-22458 <strong>Accounting Basics for a Freelancer - FreelanceSwitch - The ......</strong> No one likes accounting, designers would rather design and programmers would rather code. But it’s a necessary in the world of freelance and small business. ...... Accounting Basics for a Freelancer - FreelanceSwitch - The ……

No one likes accounting, designers would rather design and programmers would rather code. But it’s a necessary in the world of freelance and small business. ……

]]> By: Chris http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-15058 Chris Thu, 17 Jan 2008 23:31:11 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-15058 Time59 handles timekeeping, expenses, invoicing and payments. $19.95 per year for unlimited use. Designed for busy solo professionals. http://www.time59.com Time59 handles timekeeping, expenses, invoicing and payments. $19.95 per year for unlimited use. Designed for busy solo professionals.

http://www.time59.com

]]> By: Dennis Howlett http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14731 Dennis Howlett Sat, 12 Jan 2008 05:25:18 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14731 I'll say right up front that I'm an ex-partner in a firm of British Chartered Accountants who writes about innovation (not a joke) for professionals at http://www.accmanpro.com. About 8 months ago I was invited to get involved with FreeAgent Central (http://www.freeagentcentral.co.uk) an online financial management solution. That means you can look at this as a pimping post if you wish. ;) The idea was developed by freelancers who were fed up of having a solution imposed on them that didn't meet their needs. the guys built something THEY could work with. Since then, the solution has been taken forward and handles all day to day financial transactions. File export for the accountant is there but the real nugget is the ability to know in advance what your likely tax position will be. That means no nasty shocks or surprises. It also means you can get the best out of your professional relationship with the accountant. At present the solution is only UK based but..we're putting our toe in the water for international come the end of January. It won't have it all but the bones will be there. We're hoping to develop with the help of the community that grows around the service. We're transparent on support and feature development. We do that by using GetSatisfaction which we recommend to others as a great way to surface and find answers to problems. http://getsatisfaction.com/freeagentcentral Like many other services, we offer a free trial period, there's a video demo, a bunch of references (none of which were PR massaged - promise!) and plenty of other information for you to peruse. I’ll say right up front that I’m an ex-partner in a firm of British Chartered Accountants who writes about innovation (not a joke) for professionals at http://www.accmanpro.com. About 8 months ago I was invited to get involved with FreeAgent Central (http://www.freeagentcentral.co.uk) an online financial management solution. That means you can look at this as a pimping post if you wish. ;)

The idea was developed by freelancers who were fed up of having a solution imposed on them that didn’t meet their needs. the guys built something THEY could work with. Since then, the solution has been taken forward and handles all day to day financial transactions.

File export for the accountant is there but the real nugget is the ability to know in advance what your likely tax position will be. That means no nasty shocks or surprises. It also means you can get the best out of your professional relationship with the accountant.

At present the solution is only UK based but..we’re putting our toe in the water for international come the end of January. It won’t have it all but the bones will be there. We’re hoping to develop with the help of the community that grows around the service.

We’re transparent on support and feature development. We do that by using GetSatisfaction which we recommend to others as a great way to surface and find answers to problems. http://getsatisfaction.com/freeagentcentral

Like many other services, we offer a free trial period, there’s a video demo, a bunch of references (none of which were PR massaged - promise!) and plenty of other information for you to peruse.

]]> By: Becoming A Writer Seriously » More Best of the Web: Freeware Links, http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14657 Becoming A Writer Seriously » More Best of the Web: Freeware Links, Fri, 11 Jan 2008 05:24:01 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14657 [...] Switch carries a guest post entitle Accounting Basics for Freelancers. Another blogger, commenting on this post, recommends QuckBooks as an essential tool to keep track [...] […] Switch carries a guest post entitle Accounting Basics for Freelancers. Another blogger, commenting on this post, recommends QuckBooks as an essential tool to keep track […]

]]> By: mark http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14467 mark Tue, 08 Jan 2008 07:21:25 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14467 There are a lot more online accounting applications popping up. It is really a waste of money to pay $14 a month for an accounting application if you done have to worry about backups, multi user issues, upgrading. Quickbooks it like $150 per user per year if you upgrade each year. I found this site I had not seen before, it is called eFinancials.com, they are online and during their beta are free. The seem to have invoices that you can include your custom logo on, with reporting. And I noticed you can download your data from them into CVS files from their reports, so no major worry if you want to move to another service. I may just give them a try... There are a lot more online accounting applications popping up. It is really a waste of money to pay $14 a month for an accounting application if you done have to worry about backups, multi user issues, upgrading. Quickbooks it like $150 per user per year if you upgrade each year.

I found this site I had not seen before, it is called eFinancials.com, they are online and during their beta are free. The seem to have invoices that you can include your custom logo on, with reporting. And I noticed you can download your data from them into CVS files from their reports, so no major worry if you want to move to another service. I may just give them a try…

]]> By: Top Tips: Accounting Basics For Freelancers « The Chamber http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14436 Top Tips: Accounting Basics For Freelancers « The Chamber Mon, 07 Jan 2008 13:42:25 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14436 [...] in Top Tips. Tags: accounting, Freelance, money, tips trackback Freelance website Freelance Switch has posted a great little article with tips on accountancy for [...] […] in Top Tips. Tags: accounting, Freelance, money, tips trackback Freelance website Freelance Switch has posted a great little article with tips on accountancy for […]

]]> By: jb. http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14322 jb. Fri, 04 Jan 2008 17:27:35 +0000 http://freelanceswitch.com/the-business-of-freelancing/accounting-basics-for-a-freelancer/#comment-14322 I think the best idea here is to just rely on Step 5 and find your accountant first. I know I did and he's been an invaluable resource in getting my business set up in a way that won't get one in hot water. Most people can do their own bookkeeping, but it's very very very advisable to consult an accountant and a lawyer when you set up your business practices. I'm not an accountant, or a lawyer, so my comment above is from my experience as a freelancer who's had to deal with a lot of this stuff. Commingling funds is not a good idea, but the biggest concern (from what I've been told) is you need to have a strict separation on the incoming money and money that goes out needs to be documented. It makes it harder and harder for the IRS to sort things out if you're all willy-nilly with your finances mixing business and personal with abandon, so they get a little bent out of shape and hit you with a lot more scrutiny. The big concern the IRS has with corporations of one is that the officer (you) is being paid a reasonable salary (with attendant FICA payments, sometimes referred to as "self employment tax"). My accountant tells me that until the business is successful enough to pay market rate, 1/2 of profits is a good number that's hard to argue with from the IRS's side. From what I'm told this whole issue is what they're more concerned about when it comes to commingling funds on the corporate side. They're looking for ways you're getting compensation "off the books". Not commingling your funds also helps a ton with the year-end tax close-out. It's much easier when you've kept everything straight, which translates to a lower bill from your CPA... and you're a lot less likely to miss a deduction too. On the legal side, it's usually not difficult for the corporate veil to be pierced in the case of a single-member LLC or a corporation with a single shareholder because it becomes obvious to the court hearing the case that the corp or LLC are only really a wrapper around the person and not a real separate entity. There's so much more to the whole separate entity thing than just having a separate bank account and credit card. Instead of relying on limited liability to protect your personal assets, I've been advised it's much better to just get business liability insurance and head off the whole thing before it becomes an issue. I think the best idea here is to just rely on Step 5 and find your accountant first. I know I did and he’s been an invaluable resource in getting my business set up in a way that won’t get one in hot water. Most people can do their own bookkeeping, but it’s very very very advisable to consult an accountant and a lawyer when you set up your business practices.

I’m not an accountant, or a lawyer, so my comment above is from my experience as a freelancer who’s had to deal with a lot of this stuff. Commingling funds is not a good idea, but the biggest concern (from what I’ve been told) is you need to have a strict separation on the incoming money and money that goes out needs to be documented. It makes it harder and harder for the IRS to sort things out if you’re all willy-nilly with your finances mixing business and personal with abandon, so they get a little bent out of shape and hit you with a lot more scrutiny.

The big concern the IRS has with corporations of one is that the officer (you) is being paid a reasonable salary (with attendant FICA payments, sometimes referred to as “self employment tax”). My accountant tells me that until the business is successful enough to pay market rate, 1/2 of profits is a good number that’s hard to argue with from the IRS’s side. From what I’m told this whole issue is what they’re more concerned about when it comes to commingling funds on the corporate side. They’re looking for ways you’re getting compensation “off the books”.

Not commingling your funds also helps a ton with the year-end tax close-out. It’s much easier when you’ve kept everything straight, which translates to a lower bill from your CPA… and you’re a lot less likely to miss a deduction too.

On the legal side, it’s usually not difficult for the corporate veil to be pierced in the case of a single-member LLC or a corporation with a single shareholder because it becomes obvious to the court hearing the case that the corp or LLC are only really a wrapper around the person and not a real separate entity. There’s so much more to the whole separate entity thing than just having a separate bank account and credit card. Instead of relying on limited liability to protect your personal assets, I’ve been advised it’s much better to just get business liability insurance and head off the whole thing before it becomes an issue.

]]>