Many people find that working from home is a very attractive option, especially if they own their own business. However, it can be difficult for one person to cope with all the aspects of running a business. It may turn out that you’ve overlooked certain organisational aspects that end up costing you far more than was necessary. These frivolous expenses can quickly add up and risk your business’ health. Luckily, there are plenty of simple ways you can learn to manage your finances and save money when you’re self-employed. Here’s our list if you’re in need of a little extra assistance in this department.
Manage your income
When you work as a freelancer or if you’re self-employed, your monthly income will probably not be consistent. This means that in one month you will be snowed under with work, and in another you may be sitting idly. Therefore, it’s important to develop a strategy to neutralise periods when your income is below average. To do this, in lucrative months you should put some money into a saving fund. That way you can use this money when work slows down. By doing this, you won’t have to borrow money from credit cards and then have to pay interest, and you can feel more secure during those slower months.
When you work on your own, you need to deal with everything – the current work projects, monitoring your income and expenses, maintaining communication with customers, and so on. But most importantly, you need to keep track of bills that your customers have to pay. You cannot allow someone to leave without paying. Some clients feel that because of the relaxed structure of a self-employer’s business model, they can get away with delaying payment. Set the time frame in which your bills are due, let’s say two weeks, and remind your clients by phone or email that it’s time to pay your invoices. You can also send a solicitor’s letter to negligent customers. There are several varieties of such letters. The simplest of them is called the Letter Before Action which will cost you only a few pounds. It can encourage your debtor to pay off debts within seven days. If this letter does not help, you can send the Late Payment Demand Letter and claim late payment interest along with the bill payment.
Keep track of supplies
One great advantage about working from home is that you can significantly save on a working wardrobe and fuel for commuting. When your house is your office, you do not need to have a pile of dresses or suits; you can even work in your pyjamas. At the same time, there is no temptation to grab a cup of coffee for three pounds every day on your way to work.
You can also save on stationery and other office supplies. Why to buy a heap of pencil and pens to only find them scattered around the house or just lose them? Instead, it’s worth thinking about purchasing personalised stationery items, for example personalised stylus pens, notebooks, file folders, etc. By investing in such items, you can actually save money because you better keep track of them and they will also help promote your business.
Claim for business expenses to offset your taxes
Virtually all costs associated with running a business can be put through a tax return. If you work from home, you can deduct rent, electricity, gas, and other utilities like the internet, phone, software, computer services, etc. Do not forget to include expenses on business travel, business entertainment, supplies, postage, shipping, and subscriptions to claim tax deductions.
Hire a professional
If the financial side of running a business is beyond your understanding, do not hesitate to apply to professionals. Perhaps the idea of spending a couple of hundred pounds for accountant’s services does not look attractive at first glance, but you have to dig a little deeper and you will see a lot of benefits. The first one is the most obvious – when all your papers are filled in correctly, you don’t need to worry about receiving a dreaded letter from the tax authorities. Secondly, an accountant will help determine expenses that you can claim as tax deductions. And thirdly, the cost of hiring an accountant is also tax-deductible.