If you’re a freelancer or solopreneur, you already wear many hats. You’re the boss, the worker, the marketer—and yes, the accountant, too. Keeping track of your income and expenses might not be your favorite task, but it’s one of the most important. Good bookkeeping can help you stay organized, save on taxes, and make smart business decisions.
At Sovereign CPA Group, LLC, we help people stay on top of their finances with smart, simple tips. When you’re ready to take the stress out of small business accounting, give us a call at (205) 402-4245.
1. Keep Your Business and Personal Finances Separate
One of the most important steps in small business accounting is keeping your personal and business finances separate. Open a separate bank account just for your freelance or solopreneur work.
This makes it much easier to track your income and expenses. It also helps during tax time because you won’t have to dig through personal purchases to find business-related ones.
If you use a credit card, consider getting one just for your business expenses. This way, you can keep everything clean and organized.
2. Track All of Your Income
Freelancers and solopreneurs often work with many clients. That means money can come from several places. It’s easy to miss something if you’re not careful.
Make sure to record all your payments, even if they come from apps like PayPal, Venmo, or Zelle. You should also keep track of tips, bonuses, or any other income.
A good rule of thumb in small business accounting is: if money comes in, write it down. Keeping a log or spreadsheet is helpful, or you can use accounting software.
3. Save Your Receipts
You can lower your taxes by writing off certain business expenses—but only if you have proof. That’s why saving your receipts is so important.
This includes receipts for things like office supplies, software, advertising, and even part of your rent or internet if you work from home.
Some people keep a folder with printed receipts. Others take pictures of receipts and store them digitally. Whatever works for you, just be sure you have a system in place.
4. Use Simple Accounting Software
You don’t have to be a math whiz to handle small business accounting. Today, there are many easy-to-use software programs that can help.
Some popular options include QuickBooks, Wave, and FreshBooks. These programs can track your income, expenses, send invoices, and even prepare basic reports.
Using software helps you avoid errors and saves you time. It also makes it easier to hand over your records to a professional when needed—like us at Sovereign CPA Group, LLC.
5. Set Money Aside for Taxes
Freelancers and solopreneurs don’t have taxes taken out of their paychecks. That means it’s up to you to set aside money for state and federal taxes.
A good rule is to save 25–30% of every payment you receive. You can put it into a separate savings account just for taxes.
This way, you won’t be caught off guard when tax time comes around. Staying ahead is one of the most important parts of smart small business accounting.
6. Pay Estimated Taxes Quarterly
Since you’re self-employed, the IRS expects you to pay taxes four times a year—these are called estimated quarterly taxes.
The deadlines are usually in April, June, September, and January. You can estimate how much to pay by looking at your income from the last quarter.
Filing quarterly taxes can be tricky, but it’s important to avoid penalties. If you’re unsure, the team at Sovereign CPA Group, LLC can help make sure you’re paying the right amount.
7. Know What You Can Deduct
There are many deductions available to freelancers and solopreneurs. Some of the most common include:
- Home office expenses
- Business travel and meals
- Software and subscriptions
- Marketing and advertising
- Professional services (like accountants!)
Knowing what you can deduct can help lower your tax bill. Small business accounting becomes much easier—and more beneficial—when you know what counts as a write-off.
8. Review Your Finances Monthly
It’s easy to forget about accounting when you’re busy with clients or projects. But taking time each month to review your finances is key.
Look at your income, your expenses, and how much profit you made. This can help you plan for slow months, make smart purchases, and grow your business.
Monthly reviews are also a great time to make sure everything is correct, and nothing is missing. This small step can prevent big headaches later.
9. Hire a Professional When Needed
Even if you like handling your own books, there are times when it’s smart to get help. For example:
- When it’s time to file taxes
- If you receive a letter from the IRS
- If your business is growing fast
- If you’re spending too much time on accounting tasks
An expert in small business accounting can help you save money and time—and give you peace of mind. At Sovereign CPA Group, LLC, we’re always ready to help Birmingham’s freelancers and solopreneurs succeed.
10. Plan for the Future
Finally, don’t forget to plan ahead. This could mean setting savings goals, planning for retirement, or investing in your business.
Small business accounting isn’t just about today—it’s also about the future. When you know where your money is going, you can make smart choices and build the life you want.
And remember, the earlier you start planning, the better off you’ll be.
Small Business Accounting in Birmingham
Running your own business is exciting—but it also comes with responsibility. By following these simple tips, you can take control of your money and make small business accounting a lot less stressful.
Whether you’re just getting started or have been freelancing for years, Sovereign CPA Group, LLC is here to support you every step of the way. Give us a call at (205) 402-4245 to schedule a consultation and find out how we can help your business grow.
