Why Good Record Keeping is Vital for Freelancers
Why is good record keeping vital to those who are freelancers? Well, there is a lot that goes into freelancing and it isn't all about just doing your job well. You have to think like a businessperson and that means you have to keep records of everything you do. A lot of money is riding on your ability to keep records of your dealings in case anyone ever disputes what you are doing.
Clients don't always pay their bills. Whether it is intentionally done, or not, it means you have to prove that you are owed money. If you take a client to court and cannot prove that you are owed money for services, the judge is going to throw your suit out and you are not going to get any money out of the deal. Simply having an invoice will make things so much easier.
The IRS is going to want to know what you are up to as well. If you take a deduction for something, the IRS might send you an audit. An audit doesn't have to be the end of the world, but if you don't have any documentation, it can be a serious hassle. It could result in having to go to court, paying fines and probably drawing the watchful eye of the IRS in the future.
Good record keeping makes it easier for you to save money in other ways as well. If Staples offers you a discount on pens if you buy 10 packs at once, you should keep the receipt in case you don't get your rebate. Conversely, you know that you bought ten packs of pens, so you know that you should be set on pens for the time being, so don't spend money on something you don't need.
Knowing your inventory is good for anyone who is self-employed. If you run a store where you sell hats, but you run out of the white hats, you will have a lot of impatient, angry customers. If you are a plumber, you aren't going to want to get to a job and realize you don't have a plunger, or that you suddenly realize it broke. That isn't going to help you or the guy who now has a flooded bathroom floor.
A freelance, or any self-employed person, should really know how to keep track of records. This will show that you are owed money by a client, that you have taken good deductions on your taxes and will make sure you don't upset any of your clients. Good record keeping is good business, so keep good records.
