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It’s easy to let the financial side of our career fall to the bottom of our priority list. It’s not a favourite task for most of us. We even justify it by convincing ourselves that time set aside to deal with invoices and keep our books up to date is time wasted –  we could be earning money!

But if you’re a freelancer, staying on top of your finances should be a priority. Here are our top five reasons why:

You Will Always Be Aware of Your Financial Health

Wonder if you can afford to take a holiday or pay that bill? Need to apply for funding? Then you’ll need an accurate picture of your financial health. If you let control of your finances get away from you, it can be all to miss the fact that you’re about to go overdrawn – or that you’re just not earning enough to pay the bills.

Conversely, you could have money building up in an account that’s making little or no interest, when it could be put to better use.

You Can Estimate Your Tax Liability More Accurately

The only thing more dreaded than a tax return is the discovery that you owe far more tax then you thought. By keeping an eye on your finances, you’ll always have a good idea of how much you’ve earned in the current financial year, meaning there should be no nasty surprises.

Armed with this knowledge, you could put a suitable amount away every month in preparation for your tax bill.

You Can Chase Up Late Payments Immediately

Without an accurate idea of who owes you what and when, you might miss unpaid invoices and not notice that some clients are persistent late payers. This interrupts your cash flow and loses you money – and late payers are more likely to continue their behaviour if they consistently get away with it.

It Will Reduce Pre-Tax-Return Panic

The printing of invoices, the scrabble around for receipts, the frantic calculations… was the time you spent guiltily ignoring your book-keeping worth the stress of that manic rush to get your tax return in on time? Probably not! By filing away receipts and paperwork as you go, you’re making completing your tax return a lot easier for yourself.

If you need to complete VAT returns too, keeping your records up to date is a must.

And the bonus of reason 4 is reason 5…

You Can Keep HMRC Happy

Submitting correctly completed forms to HMRC in a timely manner will keep HMRC happy and make you less likely to be the target of their investigations. It will also ensure that you don’t incur a hefty fine for late submission.

Whether you deal with your finances for ten minutes at the end of every day or make it an end of the week task, hopefully you’re now convinced that it’s a worthwhile use of your time.

If you’re reading this, it seems like you’ve got some spare time now, so off you go… start as you mean to go on.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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