The first step to keeping track of your freelance expenses is in knowing what even qualifies as a business expense.  Do your research into the state and federal laws to figure out what you can deduct.  Make a list and post it by your computer.  A basic rule of thumb is that, if you bought it so you could do your freelance work, it has a good chance of counting as an expense.  This means all of the office supplies you purchase like the ink for your printer and the stamps for your contracts.  It also means all of the home office things you’ve got, like the room you use, the desk you sit at and the phone line you’ve got.

Once you know what your business expenses are, you need to keep track of them in an organized fashion every time that you make a purchase.  There are several different ways that you can do this.  One is to save receipts.  In a file, marked clearly with the date and what the purchase was and what it was used for in relation to work.  Another is to use one of your credit cards solely for business purchases and to make all purchases on that card - pay your business phone with that card, use that card at the store for work supplies, and so on.  Yet another is to keep spreadsheets tracking your expenses.  This is best done in conjunction with one of the other methods so that you have an actual paper trail (and not just a document that you drew up) should the IRS ever come knocking at the door to your freelance business.

No matter which of these methods you use to keep track of your business expenses, you need to schedule time into your freelance schedule specifically for the purpose of accounting.  This could be something that you do weekly but is more likely to be something that you take care of on a monthly or quarterly basis. Just mark a day on the calendar as “money day” and use that day to go through your receipts, update your spreadsheets or double check your business credit card accounts.  Simply knowing that you’ve got the time to take care of this part of business can make the entire process that much easier.

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[tags]expenses, receipts, keeping track of expenses, keeping track of receipts, organizing receipts, business receipts, business expenses, bookkeeping, small business, consulting, freelance, freelancing[/tags]