{"id":1736,"date":"2023-03-24T11:40:45","date_gmt":"2023-03-23T22:40:45","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=1736"},"modified":"2023-05-25T14:15:16","modified_gmt":"2023-05-25T02:15:16","slug":"looking-after-your-business-money-as-a-freelancer","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/looking-after-your-business-money-as-a-freelancer\/","title":{"rendered":"Looking after your business money as a freelancer"},"content":{"rendered":"

Afirmo\u2019s Learning Hub is packed full of useful articles that will prepare the way for a successful financial life for you as a freelancer. To make it easier to find the info you need, here is an overview of the main tasks.\u00a0<\/span><\/p>\n

Setting up a business bank account<\/h3>\n

Right from the get-go it\u2019s helpful to separate your personal money from your business finances. That means a separate bank account for receiving business income and paying business expenses. While having a separate account isn\u2019t required by law if you\u2019re a sole trader or freelancer, it makes accounting a whole lot easier. If you\u2019ve chosen to begin self-employment as a limited company, a separate business bank account is required by law.\u00a0<\/span><\/p>\n

Talk to your banking provider about setting up an account purely for your work. They\u2019ll make a recommendation based on whether you\u2019re a sole trader\/freelancer or limited company. You can also set up a debit or credit card that\u2019s linked to the account, for paying business expenses.\u00a0<\/span><\/p>\n

Costing your services<\/h3>\n

Working out how to price your services requires research and careful thought. Unless you\u2019re a very rare specialist, the internet is full of people who do what you do. See if you can find out how much other freelancers charge who are working in your location and industry. Usually, work is costed on a per hour basis, and that hourly rate is used to work out estimates for a total project. If you\u2019re a writer, a per-word rate is also common.\u00a0<\/span><\/p>\n

It\u2019s highly likely you\u2019ll need to charge more per hour than you were paid as an employee, because you need a rate that allows for slow periods. For more about developing a costing structure, check out Afirmo\u2019s article about <\/span>how to price your freelance services.<\/span><\/a><\/p>\n

Providing estimates or quotes<\/h3>\n

Part of establishing your reputation as a reliable freelancer is providing clients with an estimate or quote before work starts. Very few customers will be prepared to just accept your hourly rate and let you forge ahead without a clear view of the eventual total cost. For large projects you might need to break work into stages and quote each stage separately as you progress through the project.\u00a0 But your client will still need at least a ballpark figure for the entire cost, so that they can allow enough budget.\u00a0<\/span><\/p>\n

An estimate is generally presumed to be within 15% of the final cost. A quote is a fixed price that can only be revised if the project scope changes. If you want to generate your quotes easily, check out Afirmo\u2019s<\/span> Quoting Tool<\/span><\/a>.\u00a0<\/span><\/p>\n

Sending invoices<\/h3>\n

Preparing and sending invoices promptly will become a routine part of your new life as a freelancer. Without invoicing there is no income. It\u2019s best practice to establish your own payment terms, i.e. billing on 20<\/span>th<\/span> of the month for payment before 20<\/span>th<\/span> of the following month. Alternatively you can ask clients what their preferred payment terms are.\u00a0<\/span><\/p>\n

It\u2019s ideal if you can use an online invoicing system that\u2019s linked to your financial bookkeeping, rather than whizzing up an invoice in Microsoft Word. Afirmo\u2019s <\/span>Sales Invoicing Tool <\/span><\/a>ticks all the boxes for you – from being tax compliant to ensuring your invoicing is professional, and that you get paid on time.\u00a0 For more on invoicing check out <\/span>How to Invoice like a Pro<\/span><\/a>. <\/span><\/p>\n

Collecting and paying GST<\/span><\/h3>\n

Whether you need to register for GST or not will be determined byhow much you earn. The threshold is $60,000 a year, so if you earn more than $60k a year as a freelancer you do need to register for GST. If you don\u2019t earn more than $60k, GST registration is optional.\u00a0<\/span><\/p>\n

Part of the GST registration<\/a> process means choosing whether you\u2019ll file GST returns every two months or every six months. Once your registration is complete and you have a GST number, 15% GST needs to be added to every invoice you produce. For more on GST check out <\/span>What is GST? <\/span><\/a>You can also check out our handy GST calculator here<\/a>.<\/p>\n

Paying income tax<\/h3>\n

In your former life, as an employee, income tax (PAYE) was deducted from your salary or wages by your employer, i.e. nothing for you to do. As a freelancer, paying your fair share of tax is your responsibility. There are two ways this can happen:<\/span><\/p>\n