If you’re a talented creative about to go freelance then here’s some essential accounting advice to help get your business off to a great start.
First-up, decide if you’re going to do business in your own name as a sole-trader or as a company. Having a company gives you the flashy title of Director and it should also give you a little more legal protection if the worst were to happen and things went belly-up but just remember that having a company generally costs a bit more to setup, run and shutdown.
Next, find out how much money you’ll need. In the business world this is called a cashflow forecast and it’s really just a flashy budget which shows how much money you expect to earn and what your bills to be. This’ll help answer those murky questions like how much you can spend on the fun things like your business car, coffee machine or an uber cool office. Just remember to factor in the things you’d rather not think about like Income Tax and Goods and Services Tax (GST).
Thankfully, you don’t actually have to register for GST unless you think you’ll charge more than $60,000 in the next twelve months. However, registering for GST and getting a refund, of the GST on your business expenses, will boost your bank balance and make you seem that bit more ‘businessy’. Doing the paperwork and preparing GST returns can be a bit of a drag though unless you have super easy accounting software to help out.
Luckily accounting software’s a bit cool right now so you’ve timed going freelance perfectly and being a creative you’ll probably love online accounting software like xero.com which incidentally is iPhone friendly. Accounting software may seem a bit pricey but cutting corners now and running your accounting on spreadsheets will generally cost you far more when your accountant tries to get their head around your dinky little system.
And finally, it’s essential you find a chartered accountant that speaks your language, who’s up to it technology wise and who’ll provide the care and support you need for a price you can afford. Most accounting firms charge an hourly rate but some of the newer firms offer fixed fees so you don’t have to worry about humongous accounting bills and can get on with making your business rock.
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