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In this course, author and seasoned freelancer Tom Geller shows you how to prepare for a transition to freelancing. Begin by taking a look at your career goals, the systems that will support you, and proper ways to plan for success. Find out how to marshal your resources, refine your portfolio for presentation to clients, and estimate your costs to avoid any surprises on the financial front. Plus, discover how to create invoices, manage your books and taxes, expand your client base with marketing, and grow your business.
A bonus chapter covers common questions freelancers have when entering the field.
Accounting is a huge field in itself. Some people study it their whole lives. In this video, we'll only scratch the surface both in terms of its concepts and the tools available, but let's start with some basics. First, accounting is just numbers. Although money has a big effect on how you live, you can use math to stay in control of it. That ties in with the second point. You can't beat math. If you have a $1000 and you need to pay $1500, you'll have to find that other $500 somewhere or make some other arrangement.
Let's move on to the tools you'll use to do that math. First, I assume that you already have a bank account as I discussed earlier. You'll probably have other accounts such as credit cards, a savings account and perhaps a loan. Because a lot of these account records will be on paper, you should have a paper filing system. But the paper is mostly just for your archives. In day-to-day use you're going to use accounting software. All the systems I'll mention here can handle multiple accounts just fine. In truth, you could do what you need on a simple spreadsheet.
But there are some really good programs out there that are worth considering. The big one is QuickBooks, which is designed for small businesses and it costs a few hundred dollars. I actually get by with the same company's personal finance software Quicken, although it doesn't have all the business functions of QuickBooks. lynda.com has great videos about both programs. There are also free accounting programs. The best known of which is GnuCash at gnucash.org. Wikipedia has a long list of such programs under the rubric Free Accounting Software.
Once you have an accounting system, the basic procedure is simple. You record income as it comes in and expenses as they go out. If all goes well, your accounting system will tell you exactly how much money you have at your disposal at any given time. The proof comes when you check your own accounting against statements from your bank and lenders. Then you have an opportunity to correct any errors. After you've been running your business for a while, you'll have created a record of actual income and expenses and can start making budgets and plans for growth.
No amount of accounting will solve the puzzle of getting enough money in the door, but when you have a good handle on your finances you discover how many problems that you thought were caused by a lack of money are solved by good bookkeeping. It prevents you from making ill-advised purchases, it helps you work with your bookkeeper, and it relieves the pressure that comes from uncertainty.
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