Being a free lance mother means you can easily squeeze in moments like picking up the kids from school or changing nappies, as long as you make sure you have met your deadlines at the end of the month. It might take a bit of discipline, but in general, a freelancer’s job satisfaction is very high. So, working freelance seems like the ideal option for mothers that want to have flexibility around their family.
One of the only things though, that will take extra (unwanted) time is managing your own finances. As a freelance mother, you are solely responsible for sending invoices, giving yourself a salary and doing tax returns. This might seem a bit daunting at first, but with the following tips, you should be ready to take the plunge!
Separate your bank accounts
Open a separate business account so you won’t mix up your personal money with your business expenses. It allows you to get a clear overview of your company’s cash flow, which will come in handy when you’re doing your tax return, but it also protects your personal assets from liability. As a freelancer, you are liable for legal issues and debts of the business. Creditors might go after your personal money in the rare case that your business fails. It’s therefore highly recommended to have a clear business structure in place with a separate business bank account and a company check book to prevent financial disasters.
Create an emergency fund
Freelancing can be a great option for stay-at-home mums to keep the cash flowing in. However, be prepared for the tough times. As a freelancer, you constantly need to be on the lookout for new projects and clients, which means you don’t always have a steady income. Some clients tend to pay you only after you’ve finished a project, which can take months. This means that there will be times where you barely get paid at all, and there’ll be months where you’ll get paid loads at once. It’s crucial to save up for the times that are tough and set up an emergency savings account that you can rely on when clients are slow at paying you or when your child suddenly needs a new pair of glasses. Ideally, your emergency fund should be able to cover your expenses for at least 6 months.
Plan for maternity pay for free lance mothers
In the UK, conventional employees are eligible for Statutory Maternity Pay (SMP). Self-employed women, however, don’t self-evidently qualify for maternity pay. You decide yourself when you start working again after pregnancy and how much. You might be able to claim SMP under particular circumstances, e.g. if you’re a director of a limited company and you’ve been working there for at least 26 weeks preceding the 15th week before your due date. If not, you might qualify for Maternity Allowance (MA), but this is usually a bit less and requires more planning. You can claim MA if you have worked for at least 26 of the 66 weeks before your due date, and you have earned over £30 per week on average for at least 13 weeks. You can add up your earnings from both employed and self-employed work.
Invest in accounting software
To set up a strict budget and plan for your pension, taxes and maternity pay, it might be best to hire an accountant who can do the hard work for you. However, accountants tend to charge a high rate. A cheaper alternative is to invest in small business accounting software. It helps you understand your own finances, track invoices and it gives you free bookkeeping advice. Doing your tax return at the end of the year will be a piece of cake!
Find out more finance tips for free lance mothers here:
- The first things you need when starting a business
- Top tax tips for start ups
- Can you sustain your lifestyle when one income falls away
Author bio: Lisa van der Steen is a Dutch freelance writer based in the UK. Writing on behalf of Accountz, a developer of accounting software, she has an expert knowledge of money management for entrepreneurs and freelancers.