Monday, January 16, 2006

Beginning- of-Year Do's for Freelancers

Make a List & Check It Twice -- Beginning- of-Year Do's for Freelancers

As the year begins, evaluating how to run smoother and more profitably in this year should be at the top of every freelancer's list. A beginning of year assessment will give you a head start. Following are four areas, at minimum, that should be scrutinized:

1. Type of assignments: Which segment of the market sold? Which didn't? Which markets are you going to focus on this year? How? By what means? Will you add new skills/market segments? Discontinue others? Adjust rates? Add complementary goods/services?

If you've kept adequate records, you should be able to glean all of this information quite easily. This is no time to be sentimental. Numbers don't lie. Stop focusing on markets that didn't pay and add more of those that did.

2. Tax Preparation: Don't wait until March/April. If you are a corporation, your return is due March 15th, not April 15th. Organize now so that you can start this year ahead of the competition. While they're mired in last year's paperwork, you'll be servicing customers. If the thought of accounting and inventory makes you nauseous, as it does me, invest in good software for these purposes. QuickBooks, Peachtree and Microsoft BCentral come to mind. It will pay huge dividends this time of year.

If you're thinking you'll just outsource these functions - forget it. Unless you can afford a part- or full-time bookkeeper, you will have to do some amount of accounting for your business. In fact, even with a bookkeeper, it is essential that you know your own books. Remember: Numbers are the lifeblood of your freelance business. There's no way around this. If there were, I would have found it by now - trust me.

Good software, though, can make it soooo much easier. You'll be able to run applicable reports, organize receipts (which you've been doing all along, right?), and hand everything over to your accountant in good order. Now, just think how accomplished you're going to feel!

3. Working Policies: The beginning of the year is a perfect time to reflect on your internal policies: rates, retirement plans, insurance coverage, billing systems, etc. If you want to change carriers, add incentives, phase out others, etc., now is the time.

It is much easier to begin new relationships and terminate others at the beginning of a year. Mainly, it makes for easier accounting. And, we don't want to complicate that process any more than necessary, do we?

4. Income Projections: Now it's time to look at your numbers with an eye toward the future. What can you do to increase your income by 5, 10, 20%? You should already have an idea of where the bulk of your revenue came from and what types of projects you could add/drop to increase sales. Gather all of your reports, eg, project types, income, expense, etc., and go through them thoroughly. With concrete numbers in front of you, you will be able to devise a plan for this year's income goals.

Editorially yours,
Y. Black
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