Welcome to 15 Minute Freelancer, your snack-sized guide to being your own boss and building a business and life you love. I'm your host, Louise Shanahan. My LinkedIn bio says I'm a freelance health copywriter. But for the next 15 minutes, I'll be tickling your ears with practical strategies, behind the scenes stories, and nuggets o' wisdom so you can create a freelance business that works for you. Whether you're just starting out or you've been self-employed for a while, I'll be right here with you to help me navigate the ups and downs of freelancing life. So, grab a coffee relax and join me for 15 minutes of freelancing fun. Don't forget to hit subscribe!  

Hello, my freelance friends. How are you today? Today we're going to be talking about one of my favourite subjects: money. Yes, we are getting our financial ducks in a row today. It's a pain in the arse. But it has to be done and getting paid is actually the best feeling, isn't it? So, let's get our money sitch sorted, so we can make getting paid as easy as possible. 

For many new freelancers, and even for some who've been in the game a bit longer, money is one of the biggest stresses. I certainly felt this when I was starting out until I had some of these processes in place. When you have the basics in place, it doesn't have to be so stressful. So today, I thought it would be helpful to remind ourselves of some freelance finance foundations that will make building your business feel much easier. 

The first thing is to have a buffer. If you're just striking out on your own for the first time, the thought of no longer having the relative security of regular paycheck can be scary. Even if you're already established as a freelancer, you might find your income ebbs and flows a bit. That's totally normal. What will you do if you have a quiet few months or an unexpected big expense lands on your doorstep? Like your laptop dies, and you need to scramble to get a new one? One way to take the pressure off, so you're not scrambling around taking any old project just to get some cash in the door, is to have a buffer. 

If you have savings in the bank, which is basically what buffer is, you can ride out these ups and downs with far less stress. Ideally, you'll have enough in the bank to cover your living expenses for about three to six months. That's what I would say is a reasonable amount to take the pressure off. That might vary for you and your own family situation. Decide what is going to take the pressure off for you. And that should be your target amount. That means that if you have a quiet spell, you don't need to panic. 

Before I started freelancing, I actually saved for about a year, which is quite a long time – I was definitely planning for every eventuality. And although as it turns out, I didn't actually need it in the end, it meant that I could afford to take my time to make smarter decisions about who I wanted to work with and how. Now I know that saving isn't always easy or possible for everyone. But even putting a small amount aside will help. Starting to save towards a buffer if you can, is a smart move. 

The second thing is knowing your figures. Knowledge is power. How much do you spend each month? Do you actually know? Have you sat down to add up how much you spend on all your different subscriptions and memberships. Off the top of my head, I've got FreeAgent, Canva, Calendly, Google Suite, MailChimp – there are millions! And £10 or £15 here and there really adds up. Do you know what you're spending on all of these things? Do you know when the renewal dates are? Have you got any big expenses coming up soon? Do you know how much you need to make each month to pay your bills? Once you've figured out a baseline, you can look at what you want to make each month. So we've got the “must have” and the “nice to have”. Make sure that's a goal that means something to you, not some arbitrary goal based on the internet's version of success. 

Once you’ve figured all that out, you'll want to track how much you have coming in and out. You can use an accounting software like FreeAgent or Xero to do this, you can also get a bookkeeper to help. I actually recommend doing some of this tracking yourself at least to begin with, so you really understand how your finances work. But it's up to you. I also highly recommend getting an accountant to help with your taxes. But if you're in the UK, and you're a sole trader, it's not essential and it's not super complicated. You can do it yourself. But an accountant is likely to save you money, so it's definitely worth thinking about. 

On that… the third thing is to make sure you put money aside for tax payments on account. This is something that happens in the UK. So just as a caveat, if you're in other parts of the world, I hope these tips will be helpful but you will need to double check what the situation is for you. Payments on account are often a huge surprise when they come around, so don't leave thinking about tax until it's time to pay. Starling Bank have a nice way to syphon off money for different purposes on their app, which is helpful. I do this for tax – every time I get paid, the relevant percentage goes straight in there so I can't spend it and it's ready when I need to pay my taxes. You can do this for any kind of expense. Actually, you can put aside a space on your banking app for your subscriptions or your memberships, or whatever it's going to be. When it comes to figuring out more precise amounts and managing your taxes in general, again, I think you should get an accountant to help. And if you're operating as a company, you'll have to do this. Shout out to Martin Brooks at Gold Stag Accounts. He does mine and you can follow him on Twitter for lots of top tips about your taxes and finances. But definitely make sure you are putting money aside for tax, don't wait until the last minute and then think, “oh, my God, I have a huge bill to pay.” 

The fourth thing is to keep your business and personal finances separate. If you're operating as a limited company, again, you will have to have a separate business bank account. But I do recommend doing this. Even if you're a sole trader, it will make keeping track of your figures so much easier. You’ll just need to look at one account, you won't need to look across lots of different ones and figure out what was just a birthday present that you bought for someone and what is actually your own laptop that should be counted as a business expense. I don't know if you're buying laptops as birthday presents for people. But you know what I mean! 

Number five is to pay yourself a salary. As I said earlier, some months you make more than others. It's just the way it is. It will probably even out over time. But it's good to get in the habit of paying yourself so you don't risk overextending yourself when you have a good month and then having to scrimp and save when you have a quieter month. A really simple way to do this is to set up a standing order from your business account to your personal account. If you're operating as a company, you might do this slightly differently. But again, you can speak to your accountant about the best way to do this for you. You'll want to do the same thing with your pension and investments as well. 

Number six, is to have a process for getting paid. How will your clients pay you? You can’t complain about late payments if you're not organised about sending invoices and making it super clear and obvious about how you want your clients to pay you. So have a process for getting paid. Do you want paid by bank transfer? Will you accept credit card payments or foreign currency payments? Will you have stripe or PayPal? Consider what your clients prefer. Different clients in different industries may have different expectations about how they normally operate. You want to factor that in as well. Make it as easy as possible for them to pay. You can have a few different options so that they can find something that works for them. 

Aways send invoices. Again, always send invoices! You also want to send reminders, maybe a week or a day before the payment is due just to make sure it's on their radar. Always follow up late payments as well. Again, you can use invoicing software to do this. I use FreeAgent which does everything automatically. And actually, I find that if you are really on top of this from the start, you probably won't have too many late payments (touch wood). But it's not something I really have to deal with too much. Having invoicing software will make all of that a lot simpler. You're also entitled to charge a late fee if someone doesn't pay their invoice on time. And often when you just mention this, suddenly it gets paid. So that's something you want to make sure is covered in your contract. 

Another one that I do not want you to miss is making sure you always get a deposit. This will help smooth out your cash flow. That means clients have skin in the game too. You're more confident that they're not going to ghost you. If things go wrong, you've at least got something in the bank. I usually ask for 50% upfront. But if it's if the total project amount is less than a certain amount, I'll ask for 100% upfront. You decide what's going to work best for you. But I really do recommend always getting a deposit and then you can just get on with the project without worrying about if you're going to get paid. 

And number seven, boring, but important is making sure that you have the right business insurance. It can be an expensive mistake if you don't, there are lots of different kinds, obviously. Professional indemnity is probably the most important. This protects you in the event of a client claiming a financial loss as a result of your services, which obviously we hope will never happen and your contract should be sufficient to cover this kind of thing. But it's worth having that safety net in place. You might also want public liability insurance, income protection and possibly others depending on your industry. Without jinxing ourselves, you're unlikely to need this, but it's worth having both cheeks covered I always say. 

There are your seven tips for freelance finance foundations. A big caveat I just want to add in here is that I am not a financial advisor and this is a no way to be considered financial advice. I'm just sharing some of the freelance money basics that make my life as a freelancer easier and maybe worth considering yourself. Always speak to a pro if you have questions or if you're worried about your own situation. As I've said, getting a bookkeeper on board or talking to an accountant is to be recommended. But that's obviously up to you. As a freelancer, it's your responsibility to stay on top of your finances, so you do need to know this stuff. Even if it's painful! Maybe set aside half a day a month to keep on top of it all. That's what I try to do. I've got “finance hour” or “finance Fridays”, or whatever. And that can make sure that you've got the time set aside to stay on track, check in with your figures, catch up with your accountant if you need to, and just make sure everything is running smoothly. 

I'd love to know if you find this helpful. What other questions do you have about money and finances? Let me know on Twitter, LinkedIn, or Instagram and I'll see what I can do. We might even get a finance expert to come on and talk about it. And if you enjoy this podcast, I would love it if you would be so lovely and generous as to share it and or leave me a review. Thank you and see you next week. 

You've been listening to 15 Minute Freelancer with me, Louise Shanahan, freelance health copywriter and content marketer at thecopyprescription.com. If you enjoyed this, please hit subscribe, leave a review or share it with a freelance friend. And if you've got a freelancing question you want answered on the podcast find me and say hi on Twitter, LinkedIn or Instagram. Thanks, and until next time, happy freelancing!