Freelance Finance 101: Stop Treating Your Business Like a Hobby
Invoicemicro Team
Product Team
The "Rich Freelancer, Poor Freelancer" Trap
I've seen it happen a hundred times. A freelancer lands a $10,000 project. They feel rich. They buy a new MacBook. They go on a trip. Then April comes around, and the IRS wants $3,000 of that money.
They don't have it. They are in debt. They go back to a 9-to-5.
Rule #1: The Business Account is Sacred
If you co-mingle your personal and business funds, you are asking for an audit nightmare. Open a separate business checking account. Today. It makes accounting trivial and makes you look professional to clients.
Rule #2: The 30% Law
Every single time a payment hits your account, immediately transfer 30% to a high-yield savings account dubbed "Taxes". Do not look at it. Do not touch it. That money belongs to the government; you are just holding it for them.
Rule #3: Net-30 is a Loan, Not a Payment Term
When you agree to Net-30 terms, you are giving your client an interest-free loan for a month. If you have the leverage, push for "Due linearly on Receipt" or Net-15. Your cash flow is your lifeline.
Rule #4: Use Professional Invoices
Sending a Word doc or a PayPal link screams "amateur". A proper invoice with a logo, clear terms, and breakdown items shows you take your business seriously. It psychologically primes the client to pay you faster.
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