According to the Freelancers Union, 54 million Americans are considered independent workers, a number that is only expected to rise in 2017. Now that we’re in another tax season, it is important that the nearly one-third of Americans who are considered freelancers develop a process that efficiently allows them to track expenses and other critical business documents. Proper expense management ensures that freelancers are getting reimbursed for their job-related expenses and allows them to maximize tax deductions while protecting themselves in case of an audit.
While efficient expense management is vital to any freelancer’s business, the abundance of available and differing technology can make it difficult for a freelancer to map out a cohesive workflow that best suits their needs.
The data within business documents is vital to proper expense reimbursement and tax filing, so it’s important that a freelancer’s workflow can collect data from multiple sources, including emailed receipts and paper invoices. Thanks to today’s mobile technology there is no longer a need for bulky scanners. Modern expense management solutions can turn a smartphone’s camera into a mobile scanner. With the proper mobile application, freelancers only have to snap a photo of a business document to extract important data points, like totals, dates and vendor names to be sent to accounting software.
Many of the businesses that freelancers work with rely on powerful accounting software, like QuickBooks® or Sage, so it is important that they consider an expense management system that directly integrates with the most popular accounting software on the market. Accounting software integrations promote a streamlined data entry process and gives the freelancer peace-of-mind, knowing that the right information is being put into the correct data fields.
It’s important that a freelancer’s expense tracking workflow functions in the cloud. Considering most freelancers operate out of home offices or during off hours, they need access to their most important business documents at all times – whether they’re in their minivan waiting for their kids to get out of school, or burning the midnight oil with a much-needed glass of wine. In addition to ease of access, cloud capabilities allow freelancers to better collaborate with their clients, ensuring they’re always on the same page.
More advanced expense tracking solutions even allow freelancers to assign tax categories to receipts and other documents. By assigning tax categories from the initial input, freelancers can save valuable time when using tax software, like Turbo Tax®, or save their hard-earned money by eliminating a specific process that an accountant or bookkeeper would otherwise charge a fee to execute.
As freelancers implement their expense management process, it is important that they always take a holistic view of their approach, and continue to tweak their process so that an efficient and streamlined workflow is developed. Freelancers cannot afford to be stagnant when it comes to managing their expenses. Once tax season is over and freelancers have filed their taxes, reviewing process pain points and how to remedy them is critical to promoting a more efficient workflow.
Access to state-of-the-art technologies that provide different services and solve for different deficiencies means there is no “one-size-fits-all” approach to expense management for freelancers. As freelancers build and expand their business, they should consider new tools and technologies that are able to scale with their growing business.
Source: https://www.entrepreneur.com/
Image Credit: Hero Images | Getty Images
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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