As Ben Franklin said “Beware of little expenses. A small leak will sink a great ship.” This is not to say your freelance business is going to sink by any means but just a friendly reminder that it is important to track your spending especially right now as many of us are trying to think of all the business expenses we can file for our taxes.
Track your Spending
Tracking expenses should be practiced every time a purchase is made so it becomes routine. Not only does it help keep your work/life balance organized it also helps with annual budgeting. You can have a clear idea of how much you are spending and how much you are bringing in which will ultimately give you a clear idea of how much you need to budget for your taxes. It’s tough to have the discipline to do so because who wants to add a receipt and an amount every time they have made a purchase? That is why we tried to make the expense tracking process as simple as possible with Everlance. We wanted to remove the need for paper receipts as well as make it simple to add any expense or revenue.
It’s not just about making life easier, there’s some serious money at stake as well. Let us present to you the tale of two freelancers: Jake and Sally. They are both freelance photographers, but while Jake stayed unorganized throughout the year and didn’t track his expenses Sally stayed on top of her business and recorded her deductions. Sally remembered that you pay taxes on your profit as a freelancer and not your revenue.
Spend Tracking v. Not
The evidence is pretty clear, the better you are at tracking your expenses the more you will save in the long run. Jake and Sally had the exact same cash expenses, but Sally saved an extra $1,680 at the end of the year due to recording her deductions. That was probably the easiest money Sally made all year.
Remember all it takes is a few seconds to input the expense and those few seconds will translate into a lot of money once tax season rolls around. Make sure to also track your business mileage (Pro Tip: CRA Mileage Rate).
So, make sure you are utilizing the technology that we have available to us now and use an expense tracker!
Photo credit: Unsplash.com (License CC0)