And yes, accountants and financial advisors are different! A financial advisor is usually someone who sells insurance or investments. On your personal financial portfolio, it may make sense for you to talk to a financial advisor if you’re interested in purchasing life and critical illness insurance to protect you in case anything happens.
Unfortunately as a freelancer, we don’t have an employer offering us this benefit but we do have the option to go out and get our own insurance. Also, if you are debt-free, a financial advisor can help you explore investment options. BTW, most of them get paid a commission on whatever you buy so there usually isn’t a service fee.
An accountant will help you with bookkeeping, filing your taxes, and will also help you with financial modelling for your business. FYI: financial modelling is not as sexy as it sounds. It’s where you create different models to measure how your business is doing financially or projecting how your business will do in the future.
One of the main financial models is a cashflow statement that is basically your business budget telling you if the cash is flowing in or dried up like Scott Storch’s lifestyle. Anywho… having proper bookkeeping and models like a cashflow statement is important—but if numbers and spreadsheets scare you, have no fear.
If you are a freelancer but aren’t in the position to raise money for your business yet, you most likely won’t need complex financial models; you can get by on doing the following:
1. Day to day bookkeeping: You need a way to invoice, keep track of your cashflow, who owes you money, and your expenses so when it comes time to file your annual taxes, you’ve got your shit under control. You can pay an accountant, bookkeeper, or online service like Tantelo or Bench to do it. You can also manage it yourself through platforms like Wave or Quickbooks. These are quite easy to use if you have the time and want to keep costs down.
2. Filing your taxes: With the platforms noted above, it can be simple to do your own bookkeeping if it’s just for you as a freelancer, but I really recommend hiring an accountant to file your taxes and handle that side of your accounting. They usually know things that you may not be aware of that can save you $$$ on your taxes. You can usually get an accountant to prepare your year-end filing for a few hundred dollars (Tantelo charges $250 for this). Also, filing taxes sucks, so why not pay someone to do it so you can get out to make more money doing what you do well instead?
To see the rest of the post, head over to the Kastor & Pollux blog!
For more financial tips, sign up to be a MogoMember!
Chantel Chapman is Mogo's Financial Fitness Coach and Credit Score Expert. She teaches you how to be an adult, and is also the host of our Adulting 101 events. With over a decade’s experience as a mortgage broker, Chantel recognized a need for financial education with many of her first-time homebuyers, so she began creating custom content to help guide them. Chantel is the founder of Holler For Your Dollar, a consulting firm that jump-starts anyone who’s ready to dive into the world of Adulting or entrepreneurship. Her role at Mogo puts her skills to use creating and teaching digestible, educational financial literacy content geared to millennials and daring entrepreneurs.