I got my bachelors degree in accounting, and up to this point, I don’t think I’ve fully appreciated how scary finances and taxes can be for new freelancers.

I was talking with several writers the other day and realized that many of them had never even heard of an IRA, let alone an individual 401k (the account I use to reduce my tax payments by $7,000+ every year).

In this episode, I give you three simple tax tips that will make your life easier AND put a lot more money in your pocket… or at least your retirement savings.

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Hey guys, welcome to Write Bites: a series of 10-minute episodes on writing, marketing, and freelancing.

In this episode, we’re going to be covering three tax tips that are relatively simple, pretty easy to implement but could be incredibly effective, especially if you’re doing your own taxes. And even if you’re working with a tax professional, these could be pretty helpful for you as well.

So with that said, let’s dive straight into it.

Tip #1: Keep Your Business & Personal Expenses Separate

The first and simplest tax tip is to set up a separate business account and card that you use to cover your expenses.

Probably the biggest hassle that many freelancers have coming to the end of the year is sitting down and going through their expenses and categorizing them by which of them are business expenses and which of them are personal expenses. And if you’re running all of it through the same card, it’s just going to be a huge chunk of time.

There’s just a lot of ways that things can slip through the cracks. And it’s just a whole lot of hassle that you really don’t need to have.

Setting up a business account is super easy. And then having a dedicated card, you can just run all your tools, any expense that you entail, – regardless of what you’re doing – can run through that card and it just makes it really easy to calculate at the end of the year. I’m really glad. I took way too long to do this, and I’m really glad that it is now in place because it makes things a lot easier for me. One less thing to think about. It’s one less thing to track.

Revenue usually pretty simple because you’ll funnel most of your revenue through the same places and it’s just the actual revenue payments tend to not be such a high number that its a pain in the ass to sort at the end of the year.

Expenses, on the other hand… it just can be, you know, hundreds and hundreds of line items. Even little small stuff. So something I recommend: set up that business account. It’ll make things a lot easier, especially if you’re doing your own taxes.

But even if you’re working with a tax accountant – like I do – I still have to send him the full list. Like I still have to send them the itemized list. So regardless, I highly recommend that.

And in a similar vein, track your revenue and expenses monthly, – at the end of every month, instead of at the end of the year.

Tip #2: Tracks Your Income & Expenses Monthly, Not Yearly

Just from a highly practical standpoint, you’re going to end up catching expenses that you didn’t realize were still rolling.

I once found out at the end of the year that a SAAS tool I wasn’t even using – that I hadn’t even signed up for their paid account – had been charging me for the entire year. And it was a substantial amount of money.

If I had caught that earlier, would’ve saved me a bunch of money. Finding stuff like that is something that tracking monthly is going to help you with.

And in a similar vein it also just gives you a better handle on how your business is actually doing.