The gig economy is becoming increasingly popular in the UK, with up to five million people now making up the freelance workforce. However, with this increased freedom comes greater responsibility when it comes to managing your finances. Here are some tips to help ensure that you’re making the most of your freelance or gig economy income.
Know Your Taxes
The most important thing when it comes to managing your freelance or gig economy income is being aware of what taxes you owe and when you need to pay them. It’s important to keep track of all the money that you’re bringing in and to make sure that you’re setting aside the appropriate amount for taxes each month. If you’re not sure how much you should expect to pay, there are various tools available online that can help you calculate the amount you should be setting aside.
Also, make sure you’re aware of the different deadlines for taxes in the UK. Generally, you’ll need to pay your Self Assessment taxes by the 31st of January each year and you should submit the relevant tax returns as soon as possible.
Keep Track of Your Expenses
When you work for yourself in the gig economy, you can often end up with lots of small expenses that can quickly add up and eat into your profits. So, it’s important to keep track of all the expenses you’re incurring as a freelancer or gig worker. That way you can identify exactly where your money is going and limit any unneeded outgoings.
You can also use this information when submitting your taxes so that you can take advantage of any deductions and credits that you’re eligible for. Keeping receipts for all your transactions is also advisable in order to be able to prove your expenses if needed.
Make a Budget
Another important step for managing your freelance income is to create a budget. This should include income, expenses, taxes and a savings fund. Knowing how much money you’re bringing in each month and what outgoings you have can help to ensure that you’re able to cover your costs and that you’re on track for reaching your financial goals.
It’s also important to ensure that you’re able to invest in yourself and have savings set aside to cover any unexpected costs or losses. Planning ahead and knowing what your financial situation looks like can help to ensure that you’re not stuck in a difficult spot financially.
Separate Business and Personal Accounts
When managing your freelance or gig economy income, it’s essential to keep your personal and business accounts separate. Keeping track of your business transactions in a separate account can help to ensure that you’re not losing out on any tax deductions or credits that you’re eligible for. Additionally, having a clear separation between your business finances and your personal finances can make things much simpler when it comes to filing taxes.
Make Use of Online Tools
Finally, there are lots of different online tools available that can help you to manage and track your freelance or gig economy income. There are various budgeting apps and online spreadsheets that can be used to track your income and expenses, as well as software such as Xero and Quickbooks which specialise in business finance tracking.
These tools help to make it much easier to keep on top of your finances and can provide useful insights into your financial situation. Thus, it’s worthwhile investing in the right tool for your needs.
Managing your finances as a freelancer or gig worker can, at times, seem overwhelming. However, with conscious effort and a bit of planning, you can make sure that you’re making the most of your income and securing your financial future.