Last week, we brought you up to speed on the basics of managing the finances from any freelance employment that you do to bring in some extra cash – what’s commonly known as a side gig.
If you would like a recap check that article out here. We covered the essentials of pricing and keeping financial records, as well as some info about paying your taxes: basically, everything you need to be above board and operational.
For part 2, we’re going to delve a little deeper to uncover some financial tips that might help you take things to the next level.
Opening a dedicated bank account
This is quite a basic step, although we understand that you may want to wait until you have more than a couple of jobs lined up before you go to the hassle of opening up a bank account.
Still, as soon as you have some regular work rolling in it will be an easy way to separate your personal finances from your business and therefore keep track of all your earnings properly.
The question is: business or personal? This depends on a couple of factors. If you’ve set up a limited company or partnership, then it will have to be a business account.
If you’re operating as a sole trader, though, you can choose between the two. A business account may still be preferable, as it will offer features that help make managing your business finances easier.
However, it is also more likely to have some sort of fee attached. Compare the options on sites such as Money Supermarket.
Looking into insurance options
A second financial product to consider is insurance. First of all, be aware that your home contents insurance may not cover a home office, meaning that important and sometimes expensive equipment that you use for work is potentially uninsured.
Double check your policy! Next, look into dedicated sole trader, self employed or small business policies.
Many companies offer packages that are designed to cover a range of different risks. Important among these are public liability insurance – which protects against claims against your business for injury or property damage – and professional indemnity insurance, which covers you for claims stating that you’ve given bad advice.
Financial advice can help you to determine which of these are relevant to your specific work. While this will mean paying out money upfront, it can also stop you losing big sums later.
Set up a private pension
If you have a full-time regular job, then you should be paying into a pension: it’s a legal requirement for your employer to set this up on your behalf (and match your contribution).
However, if your ‘side-gig’ is starting to get serious, and you’re dropping your hours to do more freelance work or considering going full time, then you need to make sure you’re setting up for the future.
Now you’ve got the basic knowledge needed to be a financial success, we hope that you embrace your side project and consider how you can use it to bring in some extra bucks: good luck!