Remember you have to be responsible for your own taxes. If you make mistakes, it can cost you thousands. If you do not work for a tax company or are an accountant you should not really try to manage your taxes on your own. There are so many ways that a tax professional can save you money. It is worth the investment of hiring one.
( Read the transcript )
Let’s review our profit formula once again.
Hourly charge x number of hours you worked + any costs
As you see costs need to be taken into account when making sure that you make the most profit possible.
You have to pay close attention to how you are spending your money, because spending has a direct impact on your profit margin. When you are faced with buying some equipment or services as a freelancer you must look closely at what you are buying. Cost comparison is very important. The time you spend can save you money in the long run. Sometimes you may have to wait until the best possible price on a product or service is available.
Avoid impulse buying. It is easy to see a product and want to buy it immediately. Wait and shop around. After you have shopped around and have found what you think is the best price, sleep on it. Wait a day or two and look at the product or service again. Is it what you really need or is it a want? Then look again for the best price. If you think you have found it, only then should you make a purchase.
There are other ways to save. Find out whether any organizations or companies you are associated with offer discounts. There are seasonal times of the year when certain items are cheaper or are on sale. Often, when the next year’s model becomes available this year's model goes on discount in order to move it out of stock. Look on Amazon.com and especially eBay for the product. You have to be careful. Just because it is on eBay does not mean a product or service is cheaper. You have to know what the average price of an item is before you should commit to buying on EBay.
Look at those ever present circulars that come in the mail. They often have sales for the items you have been waiting to buy. Be patient and be a good shopper. In the long run, the time you wait can save you money.
Look at your home office. Are you using an excess of energy? Find out where you can save money. Even the light bulbs you use can mean pennies-a-day savings that add up in the long run. If you could save just a dollar a day in energy you could save over $365.00 annually.
Look at the services you use: energy, internet, phones. Shop around and compare to see if you have the best deal. A lot of companies such as cable companies can bundle these services for a price lower than the cost of each individual service. Call around and shop.
How are you sending packages? UPS? US mail? FedeX? Shop and find out the most cost effective way to send packages. Give your self time to send packages where you don’t have to pay the extra money for express shipping. If you can fax or email items to a client you will save yourself even more money.
Try to negotiate for prices. You clients often negotiate for your price to provide a service or product. You should do the same when making a purchase. Ask the seller what their rock bottom price is. Ask if there is a discount if you buy in bulk.
What about buying products at warehouse places such as Costco and Sam’s? You can save money on products there, but again, you have to know what the product costs at another place. Also, if you have to buy 500 reams of paper to save $5.00 is it really a bargain? And do you really need 500 reams of paper all at once? Think hard before buying. Just because you can save a little money does not mean you need to spend all of your revenue at once.
If you have specific expenses that you will incur in a project, try to add the cost into your final bill. Make sure you have the understanding that they will pay out of pocket expenses. Make sure you itemize the items on the invoice that you send the client.
If a bill has become overdue then it is like the client is taking money away from you. If the money you are supposed to have is sitting in their bank rather than yours then they are collecting interest on your money. You can reduce the number of problems by making sure you send your invoice to the client right away. Try to have the shortest time possible agreed upon for the bill to be paid. Remember, you would rather have the interest accumulating in your account rather than theirs.
There are times you may have difficulty getting payment. If you cannot resolve the situation any other way you may have to resort to getting a debt collection company involved. They will take a percentage of the payment collected for their service. However, some money is better than no money.
Uncle Sam’s cut! Remember you have to be responsible for your own taxes. If you make mistakes, it can cost you thousands. If you do not work for a tax company or are an accountant you should not really try to manage your taxes on your own. There are so many ways that a tax professional can save you money. It is worth the investment of hiring one. You would not trust a car mechanic to do a tooth extraction. They may know mechanics, but not body mechanics. So if you don’t know what you are doing, it is probably better to leave those matters to folks who know what they are doing because they do it everyday. You can relax a little knowing you are being taken care of and worry less that you will have to sell your car in order to pay for taxes this year. There are ways to keep up with your expenses. These will assist you whether or not you decide to use a professional accountant:
• Make sure you write everything down. When it comes to money have a ledger of expenses and income. You can buy software such as Quicken or Microsoft Money.
• Keep all of your receipts. Put them in a file and don’t lose them. You want to keep track of your expenses. More important some of those receipts can save you money as a tax write off.
Hourly charge x number of hours you worked + any costs
As you see costs need to be taken into account when making sure that you make the most profit possible.
You have to pay close attention to how you are spending your money, because spending has a direct impact on your profit margin. When you are faced with buying some equipment or services as a freelancer you must look closely at what you are buying. Cost comparison is very important. The time you spend can save you money in the long run. Sometimes you may have to wait until the best possible price on a product or service is available.
Avoid impulse buying. It is easy to see a product and want to buy it immediately. Wait and shop around. After you have shopped around and have found what you think is the best price, sleep on it. Wait a day or two and look at the product or service again. Is it what you really need or is it a want? Then look again for the best price. If you think you have found it, only then should you make a purchase.
There are other ways to save. Find out whether any organizations or companies you are associated with offer discounts. There are seasonal times of the year when certain items are cheaper or are on sale. Often, when the next year’s model becomes available this year's model goes on discount in order to move it out of stock. Look on Amazon.com and especially eBay for the product. You have to be careful. Just because it is on eBay does not mean a product or service is cheaper. You have to know what the average price of an item is before you should commit to buying on EBay.
Look at those ever present circulars that come in the mail. They often have sales for the items you have been waiting to buy. Be patient and be a good shopper. In the long run, the time you wait can save you money.
Look at your home office. Are you using an excess of energy? Find out where you can save money. Even the light bulbs you use can mean pennies-a-day savings that add up in the long run. If you could save just a dollar a day in energy you could save over $365.00 annually.
Look at the services you use: energy, internet, phones. Shop around and compare to see if you have the best deal. A lot of companies such as cable companies can bundle these services for a price lower than the cost of each individual service. Call around and shop.
How are you sending packages? UPS? US mail? FedeX? Shop and find out the most cost effective way to send packages. Give your self time to send packages where you don’t have to pay the extra money for express shipping. If you can fax or email items to a client you will save yourself even more money.
Try to negotiate for prices. You clients often negotiate for your price to provide a service or product. You should do the same when making a purchase. Ask the seller what their rock bottom price is. Ask if there is a discount if you buy in bulk.
What about buying products at warehouse places such as Costco and Sam’s? You can save money on products there, but again, you have to know what the product costs at another place. Also, if you have to buy 500 reams of paper to save $5.00 is it really a bargain? And do you really need 500 reams of paper all at once? Think hard before buying. Just because you can save a little money does not mean you need to spend all of your revenue at once.
If you have specific expenses that you will incur in a project, try to add the cost into your final bill. Make sure you have the understanding that they will pay out of pocket expenses. Make sure you itemize the items on the invoice that you send the client.
If a bill has become overdue then it is like the client is taking money away from you. If the money you are supposed to have is sitting in their bank rather than yours then they are collecting interest on your money. You can reduce the number of problems by making sure you send your invoice to the client right away. Try to have the shortest time possible agreed upon for the bill to be paid. Remember, you would rather have the interest accumulating in your account rather than theirs.
There are times you may have difficulty getting payment. If you cannot resolve the situation any other way you may have to resort to getting a debt collection company involved. They will take a percentage of the payment collected for their service. However, some money is better than no money.
Uncle Sam’s cut! Remember you have to be responsible for your own taxes. If you make mistakes, it can cost you thousands. If you do not work for a tax company or are an accountant you should not really try to manage your taxes on your own. There are so many ways that a tax professional can save you money. It is worth the investment of hiring one. You would not trust a car mechanic to do a tooth extraction. They may know mechanics, but not body mechanics. So if you don’t know what you are doing, it is probably better to leave those matters to folks who know what they are doing because they do it everyday. You can relax a little knowing you are being taken care of and worry less that you will have to sell your car in order to pay for taxes this year. There are ways to keep up with your expenses. These will assist you whether or not you decide to use a professional accountant:
• Make sure you write everything down. When it comes to money have a ledger of expenses and income. You can buy software such as Quicken or Microsoft Money.
• Keep all of your receipts. Put them in a file and don’t lose them. You want to keep track of your expenses. More important some of those receipts can save you money as a tax write off.
