Ahh, freelancing, is a wonderful job opportunity that allows you to manage your own time, earn on your own terms, and maximize returns on your labor. Freelancing also allows you to improve on your own strengths and weaknesses while making a living doing something you love.
Bear in mind, with this choice comes the responsibility of self-management. This is inclusive of self-financial management. As a freelancer, you are responsible for your own legal documents, keeping track of your transactions, bookkeeping, accounting, paying your taxes, and getting the needed registration to continue your work. While many would contest that freelancing is not a legitimate job that would warrant registration with the Bureau of Internal Revenue (BIR) as you are not formally employed under any company, following this advice would only land you penalties and even a couple of nights in prison.
The Bureau of Internal Revenue requires all individuals earning an income to register as a taxpayer, even if the annual income of the said individual falls under the minimum required amount to assurance being taxed. Under Taxation laws, freelancers can register as self-employed individuals. Being a registered taxpayer would then mean having to file tax returns. This can only be done with proper transaction documentation and accounting. The accounting of personal finances is an essential part of managing your labor. Moreover, it is part of your responsibility as a taxpayer and as a citizen.
Bookkeeping and accounting all your transactions with clients can be done on your own. However, it is not that easy of a process as it requires following standard accounting procedures. It is not simply listing down the amount and the service rendered. There are factors to consider, like which general ledger a certain transaction would fall under. This is why it is highly recommended that freelancers hire accountants, whether it be in-house or outsourced. The following reasons listed will tell you everything and justify why you need to hire one.
Save Your Precious Time
As a freelancer, often single-person teams, your time is gold considering you earn from your labor and services rendered. This means that each minute you spend on your accounting books, and this does consume a lot of time, is time that could have been spent generating more income for yourself. Having an accountant in charge of your bookkeeping and auditing means having a pro take care of all the financial work for you. If you’re not well-versed in math and analysis, this is a god-send as it minimize mistakes as well. Having an accountant at your disposal will give you the time to devote yourself to your craft, increasing not only your income but improving your strengths along the way.
Grow Your Operation
One big misconception regarding the accounting process is that accountants only count your money for you. However, accountants do more than monitor each transaction that occurs. They are also there to advise your financial decisions and to provide you with careful analysis on how to generate more income, improve business sales, and identify the services that bring in the most buck for you. Think of them as expert business advisors. They will help you grow your freelance job in terms of scale and income and may even help you turn this into a full-blown business venture.
Keep You Out of Trouble
In terms of legalities, accountants help keep you out of trouble. They prepare the proper tax documents and prepare accounting books according to the standards set by the BIR and international accounting standards. Hiring an accountant means a reduction in the possibility of errors in your books and tax returns. This is vital, as any small discrepancy can land you a BIR audit and may cause you some hefty penalties for not following the law. Even minor mistakes on your computation of tax dues can result in stiff fines and interest arrears that will compound over time.
Save You a Lot of Money
In relation to the previous point raised, having the right forms and documents to not incur penalties will help you save money. While accounting services may cost you a few extra pesos, it is nothing compared to the potential losses a faulty tax return or BIR audit will cost you. This is money well spent and gives you a rapid return on your investments.
Help You Make Better Decisions
Accountants help you understand exactly where you are financially. This will help you see how far you’ve come, but also how much further you need to go. More importantly, an accountant will help you point out any missteps in transactions, like undercharging, which will help guide your future decisions as a freelancer.
If you need expert advice, call our team for input. We can also help you with business registration services apart from accounting, bookkeeping, and auditing.