What's your top bookkeeping tip for freelancers and solopreneurs just starting out? What's one key thing they should focus on?

Question

Navigating the financial intricacies of freelancing and solo entrepreneurship can be a daunting task. This article demystifies the art of bookkeeping by providing practical tips derived from seasoned industry experts. Arm yourself with these strategic insights to take control of your finances and elevate your business operations.

Taryn Pumphrey · Answer

The most useful habit you might ever develop, the "10-minute daily money check," is a quick morning review of your business's finances over a cup of morning coffee. This tiny ritual may prevent the nightmare of tax-season scrambles that have caught many unprepared new entrepreneurs off guard. Just 10 minutes a day in the morning to categorize yesterday's expenses and income using a simple spreadsheet or basic accounting app makes a world of difference. You'll surely forget all the crucial points when you delay for weeks or months to sort your expenses. 
This daily habit creates a natural awareness of your business's financial health, much like you can tell when your car doesn't sound quite right from driving it regularly. Instead of viewing bookkeeping as a dreaded quarterly chore, you'll have your finger on the pulse of your finances every day, likely saving both time and money in the long run.

Paul Carlson · Answer

Be as consistent as you can when it comes to updating your books. Even if that means setting reminders and reviewing things once a week. It helps you understand your cash flow better and you need that insight for making smart business decisions down the road. You'll see where your money is coming from and where it's going.
An hour or two is all you need—it doesn't need to be long. But if you let it pile up, it becomes overwhelming. You start to dread looking at your finances and that stress can affect your work and decision-making.

Anupa Rongala · Answer

For freelancers and solopreneurs just starting out, the most insightful tip is to approach bookkeeping as a strategic tool, not just an administrative task. Beyond tracking income and expenses, it's essential to focus on understanding cash flow knowing when money comes in versus when it goes out. This insight can guide better decision making, such as when to invest in tools, scale operations, or adjust pricing. Using software with reporting features can help visualize financial trends, highlighting areas to optimize. 
Additionally, setting aside a percentage of income for taxes and unexpected expenses fosters financial resilience. Treating bookkeeping as a foundation for informed planning transforms it into a driver of growth, not just a chore.

Michael Benoit · Answer

I believe the most impactful tip is to create an operating reserve by consistently saving a percentage of every payment you receive. For example, setting aside 20% from each $1,000 invoice ensures you have $200 available for taxes, unexpected expenses, or slower months. This habit builds financial resilience and reduces stress when irregular income patterns arise. In my experience, freelancers who maintain an operating reserve of at least three months' worth of expenses are better equipped to make sound business decisions and take on growth opportunities without hesitation. Establishing this practice from the beginning creates a strong financial foundation that pays off over time.

Adam Garcia · Answer

Having helped many solo entrepreneurs get their finances in order, I've found that consistently tracking your time against project income is absolutely crucial—I personally use Toggl to log hours and match them to specific client work. This simple habit helped me discover I was undercharging for certain projects by about 40% and allowed me to adjust my rates appropriately to become more profitable.

Jm Littman · Answer

Always bill in advance—at least a percentage of the total cost. Ideally, aim for 50% upfront, but if it's a large job, even 30% or 40% can provide a safety net. The key here is to protect yourself from the risk of a client not paying after the work is done.
When you bill in advance, you establish a level of commitment from the client right from the start. It also helps manage cash flow, ensuring you have funds to cover your time, resources, and expenses as you work on the project. Plus, it sets clear expectations for the professional relationship—clients who are serious about the project will respect this approach, and it filters out those who may not value your time.
For example, if you're taking on a big project, breaking the payment into milestones can work well: an initial deposit, a mid-project payment, and the balance upon completion. This phased approach keeps the client engaged and ensures you're not left chasing a large lump sum at the end.
The bottom line? Don't leave yourself exposed. Billing in advance isn't just about financial protection—it's about running your business with confidence and professionalism. It sets the tone for how you value your work and ensures you're not left carrying the financial risk.

Liga Rudzite · Answer

The best thing you can do as a new freelancer or solopreneur is to separate your personal and business finances immediately. Open a dedicated business bank account—even if you're not officially registered as a business yet—and run all your income and expenses through it. This keeps your finances clean and makes tracking income, calculating taxes, and preparing for growth a thousand times easier. It's a simple step, but it saves you from messy accounting headaches later.
On top of that, start using an invoicing and bookkeeping tool early on. Tools like QuickBooks, Wave, or even a well-organized spreadsheet can help you stay on top of payments, track expenses, and monitor profits. When I first freelanced, I underestimated the power of consistent record-keeping until tax season hit—and I spent hours piecing everything together. Trust me, staying organized from day one pays off big time.

Yaniv Masjedi · Answer

One of the best tips for freelancers and solopreneurs is to always plan ahead for your taxes. Unlike being employed, where taxes are automatically deducted from paychecks, freelancers need to manage this themselves. Setting aside around 30% of your income each month in a separate account can save a lot of stress later. It keeps you prepared when tax season rolls around and helps avoid any unpleasant surprises.
Another key focus should be on keeping detailed financial records. Whether you prefer using bookkeeping software or sticking to a manual system, what truly matters is staying consistent. Track every expense, invoice, and payment. This keeps your finances organized and also protects you in case of an audit. Staying on top of these two aspects can make managing your freelance finances stress-free.

David Speedy · Answer

Never let an unpaid invoice linger for too long. Set a system in place to follow up with clients promptly when payments are overdue. Automated reminders can make this process much easier and ensure that nothing slips through the cracks.
Staying on top of overdue payments is crucial for maintaining a healthy cash flow and preventing financial strain. Timely follow-ups also demonstrate professionalism and reinforce the importance of prompt payment to your clients.
Keeping a close eye on unpaid invoices helps reduce the risk of financial instability and ensures your business runs smoothly. It's a small effort that can make a big difference in the long term. Tracking and following up on invoices consistently is key to keeping your business on track.

Olivia Chiavegato · Answer

One key thing to focus on is your expenses. It is not as exciting or motivating as tracking revenue, especially early on, but it is important that you can specify any expenses you had for taxes and analytics.
When you are just starting out, being able to show that you operated at a net loss can help your business to preserve some tax credits, or deferred tax assets (DTAs). It also helps you have a good idea what your periodic revenue needs to be to break even. This is good for setting goals and deciding whether or not certain expenses will be worthwhile in the long run.
This allows freelancers just starting out to make more informed decisions and potentially save them from having to owe taxes during the early growth stage of their business.

Adrian Iorga · Answer

If you use your personal vehicle for business purposes, it's important to track your mileage carefully. This simple step can make a big difference come tax time, as it allows you to deduct business-related driving expenses and save on taxes.
Using tools like MileIQ can help automate the tracking process, so you don't have to worry about manually recording every trip. These tools can even categorize your trips, making it easy to separate personal and business mileage. By keeping accurate records, you ensure you're getting the most out of your deductions and avoid missing out on potential savings.
Whether it's driving to meet clients or picking up supplies, every mile counts. Don't let those miles go untracked—keeping detailed records will add up over time and provide valuable savings. Tracking your business mileage from day one will help you stay organized and prepared when tax season arrives.

Julia Rueschemeyer · Answer

I have built my business into a multi-hundred thousand dollar business, and I do my own bookkeeping and taxes. 
Tip 1: Keep your bookkeeping software simple and lightweight, so it works simply on your phone as well as your desktop. That way you can add expenses or income as you ride in a cab, shop online, or sit in an airplane. I use low-cost, minimalist Foreceipt, which is superfast and simple. You don't need or want a big, accounting software package unless you're an accountant!
Tip 2: Use online payment systems that keep all the records for you. Square and Venmo, for example, keep records of all details of payments and offer downloadable spreadsheets when you need them, e.g., at tax time. 
Tip 3: Familiarize yourself with Schedule C, the section of the IRS 1040 where you enter self-employment income and expenses. By knowing the categories on this form, you can customize your categories in your lightweight accounting system and put everything in the right category on the fly during the year. This makes tax time much easier.

Julie Goldberg · Answer

When I started my private therapy practice, I was completely overwhelmed by my finances and had no clear system. That changed when I adopted the Profit First model, which made everything click. Here's how it works: Each week, I transfer a percentage of my income into dedicated sub-accounts, such as office rent, overhead expenses, tax savings, payroll, and professional training. These sub-accounts act as budgets, allowing me to make financial decisions with clarity and intention. 
Instead of relying on the total balance in my account, I now focus on the specific funds allocated for each category. This simple system takes less than five minutes a week and has transformed how I manage my business finances. For freelancers and solopreneurs just starting out, creating a habit of segmenting your income this way can help you stay organized, reduce stress, and avoid costly surprises.

Jason Plevell · Answer

One bookkeeping tip for freelancers and solopreneurs is to prioritize the creation of a financial rhythm. This means scheduling regular financial check-ins, like a weekly money date, to review expenses, incomes, and upcoming financial needs. This approach not only builds discipline but also reduces financial surprises, much like my habit of having consistent personal check-ins built resolution throughout my recovery journey.
Additionally, accept the power of benchmarking. When I achieved my significant weight loss, tracking progress through consistent measurement was key. Apply this by setting financial goals and regularly comparing your current performance to these benchmarks. This will keep you aligned and aware of your financial health, much like monitoring my personal progress helped maintain accountability and focus.
Lastly, consider building a habit of gratitude journaling within your financial routine. Reflect on financial wins, no matter how small, to maintain a positive mindset and motivate yourself for growth. Similar to my coaching strategy, changing doubt into determination by appreciating small victories reinforces resilience and courage in managing financial challenges.

Dr. Mo Ziaei · Answer

Planning ahead is critical, so use cash flow projections to estimate your income and expenses over the next few months. This helps you anticipate slow periods and make sure you have enough funds to cover your expenses when income is low.
Projecting your cash flow allows you to avoid overspending, especially with projects that come with delayed payments. It helps you stay prepared for the future and ensures you won't be caught off guard by financial gaps.
Cash flow projections give you clarity when deciding whether to take on new projects or make business investments. Keeping an eye on your cash flow makes it easier to stay in control of your finances and feel more confident in your decisions.

15 Bookkeeping Tips for Freelancers and Solopreneurs

Table of Contents

15 Bookkeeping Tips for Freelancers and Solopreneurs

Do A 10-Minute Daily Money Check

Be Consistent With Updating Your Books

Use Bookkeeping As A Strategic Tool

Create An Operating Reserve

Track Time Against Project Income

Bill In Advance To Protect Yourself

Separate Personal And Business Finances

Plan Ahead For Taxes

Follow Up On Unpaid Invoices Promptly

Focus On Tracking Your Expenses

Track Your Business Mileage

Keep Bookkeeping Software Simple And Lightweight

Adopt The Profit First Model

Create A Financial Rhythm

Use Cash Flow Projections

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