How to manage accounts if you’re rubbish at maths
“I’m afraid we can’t let you sit the exam again, Ruth.” My GCSE Maths teacher was at his wits’ end. “We just don’t have the resources to help you. I’m sorry.”
It was my third attempt to pass Maths. I’d always struggled with maths, until I could find my own methods and workarounds. But this time was different. My school was no longer prepared to let me do resit after resit - probably because I was making their league tables look bad. So, halfway through my A levels, I went to GCSE Maths classes in the evenings for a full term, sat the exam and passed first time. Boom. I guess my original teacher and I just had different ideas of how I should learn.
That belief followed me into retail management - my past life, my alter ego, my former soap-slinging self - the belief that I was still a bit crap at maths. With guidance from the accounts team and my extremely patient peers, I gradually figured out how to do the books. And then turned around a failing store into one that ran at profit for 18 months [pats self on back].
What has this got to do with my life now? Well, when I decided to go freelance, it occurred to me quite quickly that there was no one on the other end of the phone to help if I fluffed up on my accounts. As a freelancer, you are your own accounts team, HR and people support. I was in at the deep end, and instead of a rubber ring to save me, I just had a spreadsheet.
I’ve spoken about my love of spreadsheets before - I think it’s genetic - but this one was going to save me from an ocean of blood-thirsty percentages and mysterious yet buoyant tax calculations. Armed with Google, I learned how to set formulae, tax calculations, and colour-coded cells to my heart’s content.
There are so many things I’ve discovered to help me figure out my accounts so I don’t end up making a stylish jacket out of receipts like Bernard Black. Here’s the 4 most important ways to manage your accounts when maths isn’t your favourite thing in the world.
1. Keep it simple
Let’s start at the beginning. In the UK, the current personal income threshold before you pay income tax is £12,750, which means the first £12,750 you earn, you don’t pay tax on. Ace.
For everything after £12,570, you need to be prepared. Work out how much tax you need to pay by following easy steps like putting aside 30% income from each job you do, to account for all the fun deductions like national insurance contributions, your pension, and that pesky old student loan. Basically all the stuff your PAYE tax usually takes care of, except as a freelancer you don’t have that lovely accounts team to look after that anymore.
2. Create a structure
Do your reference numbers all line up? ‘Cos they should. Decide a simple structure for creating reference numbers for jobs - for example the client name and a number signifying the job - and use this number every time you need to refer to the job. The reference number should go on proposals, quotes, invoices and payment records. Sounds simple? That’s because it is. Be consistent and get your filing in order. I recommend Google Drive because it’s dead easy to find where you’ve filed something, and it’s all backed up automatically so you don’t have to worry about where you’ve put a physical folder - and really, who has time to do it on paper?
3. Record everything
And I mean EVERYTHING. Sent a 50% upfront invoice? Record it. Received early payment? Celebrate and record it. Late payment? Grit your teeth and record it. You can do this however you like - spreadsheets, obviously - or go old skool and use a book or accounts ledger if you fancy. Just make sure that when tax return time comes around, you’ve made it as easy for yourself as possible. Otherwise you’ll be cursing your past self for being slack.
4. If in doubt, just ask
There will always be someone in your circle who can help you. A freelancer with more skin in the game, or even a freelance accountant - imagine that - can and will help you. There are tons of accounting tools like Quickbooks and the Gov.uk site can help you estimate your tax bill for the current year. It’s free to use and really simple. Or if you’re feeling flash and have the, erm, cash, you can hire an accountant to help you.
Numerical naysayers, unite!
If you’re a fellow former mathemaphobe, I hope these tips will help you. Numbers have a set, inflexible, black and white logic that can feel like a barrier when you’re more used to working in the grey space of words and language. I’ve made my peace with maths, and actually quite like it now. Just don’t ask me my 7 times tables, because I absolutely can’t do that. If you’d like to work together on something creative, or want to chat about anything in this blog, get in touch today.