Space is important in every relationship.
And money is no exception.
Just like with your ex, doing everything together may have worked when you were starting off. But in the long-run, this arrangement can cause some serious problems.
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For creative freelancers especially, it’s not great to have your personal and business money tangled up in one monthly bank statement.
Because, let’s be honest: your business finances are far more demanding. Mostly because that pesky clan of collectors (cough, the IRS) is super nit-picky about you getting them straight.
Keeping your business finances in a separate account can prevent tax issues, shed light on your business’ financial state, and even improve your credit score.
Without further ado, our top 5 reasons your freelance business and personal finances should break up.
1. Keep better tabs on your expenses.
We’ve all spent too much time sifting through the vast sea of Uber receipts and Venmo payments, trying to figure out which of them are tax deductible. It’s an arduous and error-prone task, and our worst enemies shouldn’t be subjected to it.
But when you keep your freelance biz money in a separate account, tracking those expenses becomes a breeze. Plus, with the accurate numbers, you’ll get an insight into the true operating cost of your solo-preneurship.
2. File more accurate taxes.
With some healthy distance between your business and personal expenses, tax season may even arrive with some fun surprises. (Read: refunds, baby!)
The more tax-deductible expenses you account for, the less you’ll owe the IRS — and in some cases, they might even owe you.
3. Track your business growth.
Yes, you finally got paid! But wait. Where do you stand in comparison to last month, and the month before? If you want to be your own CFO, you’ll have to track your growth.
When your creative business income and personal income (e.g. personal investments or monetary gifts) are lumped together, you could end up with an inflated view of your company’s performance.
But when you keep your business funds apart, that’s when you get *real* clarity on your financial growth. This insight will inform otherwise foggy decisions, like your rates, the volume of your work, and hiring employees.
It’s (almost) 2022! Be your own oracle!
4. Budget like a pro.
Once your biz finances are separate and taxes are set aside, you can gauge what you can afford to do with the rest of your money.
How much can you pay yourself? How much can you invest? How much can you put toward insurance, retirement, or business profit?
Once you have an accurate picture of your finances, budgeting becomes easy, and even — dare we say — fun.
5. Take a loan, rent a house, or find an investor.
Another significant reason to have a separate biz account (and even business card) that you use regularly is the benefit of trust and documentation.
Having a business account from which you pay yourself, track growth and expenses, and establish a credit score has loads of advantages. From this one root source, you can grow your potential to take out business loans, rent a space or a home, take increased tax deductions, or prove your stability to potential investors.
Pretty much, anything you might need to take your freelance business up a notch.
Now that you know to keep your business and personal money untangled…
Meet Lance.
(Cue dreamy entrance music.)
Lance may sound like the name of a hunky college football player, or a former member of your favorite 90’s boy band.
But this Lance is different.
Lance is a powerful business banking account designed for the modern freelancer.
Every month it will transfer your salary, pay your taxes, track every single deduction made with the Lance Visa debit card, and automatically set aside some cash for all your savings goals. Kind of like… a robo-CFO.
Lance’s Checkout feature also lets you get paid by clients via credit card, directly to your Lance account.
We built Lance to take the work out of your hands.
Advanced client checkout, bookkeeping, accounting, saving, salary, and taxes — Lance puts it all on autopilot.
We’re in this for a serious, long-term relationship.
Now isn’t that nice to hear?
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