243 FS Money Management for Freelancers with Luke Frye
Money Management for Freelancers with Luke Frye
On today's episode of the Freelancers' Show, Curtis and Philip discuss Money Management for Freelancers with Luke Frye. Luke co-founded Timber Tax, which helps freelancers and consultants on tax compliance and planning. He is among the first accountants at Bench.co, and appreciates the lifestyle and opportunities of working independently. Freelancers, tune in for some classic insights on taxes. Know and understand what you need to fully enjoy your pay!
Taxes and Hourly Rates
Taxes are among the biggest problems that freelancers face. Luke emphasizes their need for awareness and understanding regarding taxes. Education makes it convenient for freelancers to setup things like their hourly rates.
“So many people may go from a full time job to freelancing and they may not really consider tax implications on their hourly rate or their value-based billing.” -Luke Frye
According to Luke, many do not realize that half of the payroll taxes (in the US) is covered by employers. Freelancers might need to be more aggressive in setting their rates.
Yes to Budgeting
It's important to know how to budget tax out of your projects. Sadly, not all freelancers see the need. To budget, you can set up a different bank account for your business. You can also set aside 30% of your pay and put it in a separate savings account. This way, you have one account for running your business and another account for taxes.
Bookkeeping Tasks and Tools
Bookkeeping benefits a lot, but freelancers also have to understand what they need. If they're invoicing, they may need an additional service like FreshBooks. A bigger balance sheet may require a better solution. Non-accountants may use Xero or QuickBooks Online. Bookkeeping includes bank reconciliation and balance sheets. Download and listen to Money Management for Freelancers with Luke Frye to learn how to deal with taxes as freelancer. Don't forget to leave us a rating and review if you enjoyed the show. We would love to hear from you!