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How to Create an Income Plan as a Freelancer

Although freelancing is extremely gratifying, it can provide its own set of financial concerns. In contrast to a traditional 9-5 employment, you are responsible for billing and managing all of your own money. And this is not always the case. You must also set your own pricing, source your own work, track your spending, and meet your business income objectives as a single individual.

While the financial part of freelancing can be intimidating, anyone who takes the time to set out an income strategy can be a successful freelancer.

Whether you are a new freelancer or have been freelancing for years, these suggestions can help you better handle your finances and, as a result, earn more money.

Prepare Your Services

The first stage in developing an income strategy is to identify the money-making services you will provide. To do so, you must first determine your professional specialization.

For example, freelance photographers must decide what sort of photography they want to offer. Writers must determine what style of writing they want to specialize in and whose clients they want to work with.

Make a list of all the services you intend to provide. Add comments to each service to describe the process, such as how long you expect it to take, any potential charges, and how you intend to advertise yourself.

Determine Your Annual Income Objective

Setting an income target is essential for freelancers to achieve financial success. With a goal in mind, you may work on pricing your services properly.

First, select how much money you want to make per year. Then divide that figure by 12 to get your monthly revenue target.

Keep in mind that as a freelancer, your income may fluctuate, so even if you fall short of your income goal some months, you will have the opportunity to make it up in other months.

It is beneficial to push yourself when making goals. Set ambitious yet attainable goals. To inspire oneself, write them all down and keep them in a visible area.

Determine Your Pricing and Workload

After determining your annual income target, you must determine your pricing and workload.

Consider the following:

Assume you wish to earn $60,000 per year from freelancing. That means you should make roughly $5,000 per month.

If you’re a freelance writer and only charge $50 per 1,000 words, you’ll need to create 100 articles per month to reach your $5,000 objective. That equates to 25 articles every week, which is neither attainable nor acceptable.

You may charge $250 for the same writing services. To reach your objective, you simply need to create 20 articles per month or about five per week.

Pricing and workload are inextricably linked. When calculating your hourly rate, you don’t want to shortchange yourself as a freelancer and end up earning less than the minimum wage.

Also, don’t forget to include overhead costs in your pricing. As a business owner, you will spend some time executing duties that are required for the operation of your company but do not generate revenue. That is why it is critical to charge clients appropriately for time spent on overhead costs such as accounting, email response, and marketing.

Establish a Separate Business Account

Opening a separate company account is the simplest method to keep your freelancing finances organized. When your business expenses and income are merged with your personal income and expenses, it is practically impossible to separate them.

You can ensure that your accounting operations are neat, organized, and efficient by opening a separate business savings and checking account.

Choose an Accounting System

A good accounting system will not only save you time but will also keep your funds structured. Organized finances help to ensure that you don’t miss any payments, have outstanding invoices, or pay too little in taxes.

Consider using an accounting solution like FreshBooks. FreshBooks also lets you send and receive invoices, allowing you to manage all of your company’s money in one spot.

Maintain a Record of Business Expenses

Many business expenses can be deducted as tax deductions, so keep meticulous records of them.

Of course, you should keep track of your business expenses to ensure that you aren’t spending too much and earning too little.

Don’t Forget to Set Aside Money for Taxes

Because taxes are not deducted from freelancers’ paychecks automatically, they must pay the IRS quarterly estimated taxes.

Don’t put yourself in jeopardy by saving too little for quarterly taxes. Avoid a financial crisis by setting aside 20-30% of your wages to satisfy your tax liability. You can always save more if you wish to be more conservative.

Make an emergency fund

For personal peace of mind, everyone should maintain an emergency fund. A separate emergency fund is especially important for freelancers. Your income as a freelancer is neither consistent nor guaranteed. It is likely to change.

Though you will undoubtedly generate a bigger income in some months, there will undoubtedly be months when your income will fall significantly. Prepare for the worst by establishing a business emergency fund.

By establishing a business emergency fund, you can secure your company in the event that your income falls dramatically, while also protecting your personal finances.

Income plans are all the rage these days.

It takes time to develop an income plan, but it keeps you on track with your business. An income strategy ensures that you make enough money for the amount of work you devote to your business, enabling you to be as successful as possible.

Source: Freelance Union

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About Skyhigh.Vip  

Skyhigh.Vip is a global institutional investor with a vast interest in Arts / Construction / Education / Business Services / E-Sports and various other growth industries.  

Several of its popular portfolios include GO Chambers which is the world’s largest business chamber listing provider with over 30,000 active chambers as its members.  

Flexgigzz is the Asia leading marketplace for freelancers service and together with SOHO Learning Hub which is an online platform for short courses and both of them aims to be the number one provider in Asia. For growth industries such as E-Sport Authority which is dedicated to providing independent media coverage to all E-Sport News related from around the world and for the art world, there is Atelier Auction which is an investable art auctioneer and being in the art scene for decades.

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