When you start working as a freelancer and set up your own freelance business operations, it is important to make sure that you open up the right type of accounts to support the growth of your freelance business.
#1 Open A Business Checking Account
You need to head on down to your local bank or credit union, and create a business account. A business account, separate from your personal account, will help you accurately track the income you make from your freelance business. It will also provide you with an easier method for keeping track of expenses.
You can pay yourself a salary out of your business account; however, all of your customers should direct payments to your business account and not to your personal account. With a business account, you can keep some profit in it so you always have money for your freelance expenses at hand. A business account will also make it simpler for you to calculate your expenses and your yearly income minus all of your expenses.
When you open a business account, be sure to pay attention to fee structures. Unlike personal accounts, which you can often open fee-free, business accounts usually carry some type of fees with them. Look over the fee structure and find one that fits with how you plan on using your business account.
#2 Start A Business Savings Account
Next, you are also going to want to open up a business savings account. This business savings account is different than your personal account. You should use your business savings account to put aside money so you can pay your quarterly self-employment taxes to the federal government as well as your quarterly self-employment income taxes to your state government.
Having a business savings account will help you make sure that you are setting aside enough money to cover your taxes. You don't want to have to scramble at the end of the year to earn money to pay off your tax bill because you forget to save for this expense.
#3 Open A Business Credit Card
Finally, you should open a business credit card as soon as possible. Opening a business credit card will help you start building up a business line of credit, which is different than your personal line of credit. A business line of credit will allow you to take out a loan if you need extra cash to expand your freelancing business down the road or if you grow past being a freelancer and expand into being a small business. If you do expand, don't forget to invest in employee payroll services.
Just like with a regular credit-card, you should be careful with how you use the business credit card. Only use it pay for expenses that you can immediately pay off with the cash you have in your business checking account.
