Many thanks to Tammy Furey of Furey Coaching for this week’s excellent blog post.
’tis the season to be terrified, tra la la la la la la la la.
In the UK, as we rocket towards the end of the month, the self assessment tax return deadline looms like a spectre on the horizon.
But its no big deal, right? You have what you owe the tax man nicely squirreled away in a separate account, right?
No? Seriously?
One of the major challenges of being a freelancer is money. There is no other way to put it. Our income comes in waves and quite often there is no way of knowing (despite the work being done) when the cheque will arrive. It is all too easy to (finally) have money in your bank account, and to blow it all out of utter relief that it is there.
The secret is this: the moment the money arrives in your bank account, you have to (for your stress levels and future financial sanity) transfer out the money for taxes, into a separate savings account. What you transfer will be a percentage of the money coming in (this depends on your country and system: in the UK its 25-33%).
This system also applies to saving for your pension, holidays and a fund to see you through the dry spells, when work or cheques just are not appearing.
At the end of the day, the key to working for yourself is being your own boss. Your boss in the 9-5 world would pay your taxes. Be a good boss, get a system and let it be one more thing not to worry quite so much about.
