• Mon. Oct 18th, 2021

The Mistake Many Freelancers Make With Their Finances

ByRoger Fisher

Sep 30, 2021

The self-employed sector is not lucky enough to have an accounting department dedicated solely and exclusively to these tasks. For this reason, they have to combine these tasks with the rest of the demands of their business . As a general rule, these professionals are usually experts in their sector who want to bring their business to fruition but do not control the area of ​​finance.

This situation leads many freelancers to make mistakes when keeping their accounts. Specifically, one of the most common mistakes, and one that generates a lot of problems, is having a single checking account for personal and business finances .

Why is it necessary to separate the personal account from the professional account?
Employees do not have to carry the finances of a business, they only receive their payroll month by month at their bank. On the contrary, the self-employed do have to save the money of a company .

For this reason, taking into account the need to separate savings and expenses in two different accounts, it is essential to create an account for business expenses. It is vital to differentiate between personal expenses and professional expenses , since all the self-employed income will depend on it.

In fact, according to Bank 4Pro, 77% of small businesses finance their activity with personal resources . This means that nearly three out of four self-employed people potentially mix business and personal funds.

The main problem that this situation generates is that the professional cannot keep an exact track of the income and expenses of the business , in the same way that it will be much more complicated to complete the tax return. In addition, each time a personal expense occurred, it would be being extracted from the company’s funds.

On the other hand, the brand image is impoverished when working with a personal account with clients. In addition, in the event that the professional is forced to draw the blind forever for non-payment, he will have to respond with both his professional and personal money .

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