You have to learn accounting (sorry)
When you started freelancing, you became your own marketing and sales department.
You probably didn’t want to - you probably wanted to focus on graphic design, or video production, or web development, or copywriting, or whatever it is that you do for clients.
But you’re running a business now, and you’ve got to have some sort of marketing and sales function. So you do it.
What about finance and accounting, though?
They’re strictly internal to your business, they’re technical, and there are TONS of folks offering them as services on Upwork. So you can just hire out and delegate these operations, right?
Don’t get me wrong - it’s a great idea to get professional help for tax preparation, and it may make sense to bring in an expert for other key functions like tax planning, or bookkeeping. But you can’t just pay someone to handle this for you. You have to learn accounting.
You have to learn accounting, because there’s a good chance that the accountant you hire will be unavailable when you need them:
You have to learn accounting, because even with a reliable professional by your side, there will be a communication gap until you learn to speak their language.
And you have to learn accounting, because most of the software, and advice, and services available on the market are not designed for you as a freelancer.
You don’t have thousands of transactions a month.
You probably don’t sell physical goods.
You don’t have a team of full time employees - quite possibly you never will.
Even if you can find a unicorn accountant who speaks plain English, understands freelancing, and never disappears without warning, a basic understanding of accounting principles will save you time and money in working with them.
Feeling confident with accounting terminology will help you brace for impact in the event that you get audited by the IRS (it happens).
Being able to talk accounting-speak will help you keep your business in compliance with the law, your accounts in order (whatever that means), and your tax burden to a minimum.
I’m not an accountant. I’m a freelancer, like you.
But hopefully unlike you, I’ve been ghosted by two accountants, and audited twice. The experience has been stressful and scary and I’ve hated every minute of it.
What this taught me was that I have to learn accounting.
So I’m writing a newsletter that sifts through all the technical language, conflicting advice, and mostly-irrelevant best practices in this space, and collects the bits that are relevant to US-based freelancers who don’t a background in finance, and who grudgingly admit that they, too, have to learn accounting.
- How should you choose between sole proprietorship, LLC, S-corp, etc.?
- What should you look for in choosing an accountant, and how much should you expect to pay?
- What bookkeeping software should you use? (Or do you even need bookkeeping software?)
- When do you need an accountant vs a bookkeeper vs a lawyer? And when can you just handle stuff yourself?
- Where’s the line between legal accounting requirements and nice-to-have best practices?
- What financial reports should you actually create and pay attention to as a freelancer?
Subscribe and I’ll send you weekly updates as I write and research more on this topic (and others :).
Cancel anytime. And I never look at unsubscribes, so you won’t even hurt my feelings :)