The 4 Finance Documents Every Freelancer Needs

THE 4 FINANCE DOCUMENTS

EVERY FREELANCER

NEEDS

IntroductionIt’s no secret: it can be difficult sometimes to keep your finances in order.

This is especially true if you are a freelancer. You have to worry mostly about finding your customers, securing jobs, and getting paid.

So little attention is focused on increasing your financial knowledge. We’ll look over the four most important finance documents you need to know to help you freelance business succeed.

Profit & Loss

Also known as the P&L or income statement, this document allows you to review your income and expenses.

Revenue includes: • operating revenue & non-operating revenue• gains on long-term asset sales

Expenses includes: • operating & non-operating expenses• losses

Balance Sheet

Your balance sheet gives a nice snapshot of your business at any time and calculated: Liabilities + Owner’s Equity = Assets

Assets includes: • current assets & fixed assets

Liabilities includes: • short-term liabilities & long-term debt

Your owner’s equity includes any money you’ve invested in the business

Cash Flow Statement

This is a measurement of how much cash is flowing into and out of your business.Your cash flow includes:

• cash inflows, such as cash sales, loans, and other investments

• cash outflows, such as expenses you’ve paid, equipment you’ve bought, and other payments

Mathematically: Ending cash balance = beginning cash balance + cash inflows – cash outflows

Invoices

Although this isn’t usually included in important finance documents for businesses, it is crucial for freelancers.

Invoices are the finance documents you use to make sure you get paid for your goods and services.

They are the tools you need to get your money. They are also a record of your financial activity and a legally binding document once both parties have signed and agreed. For the best invoicing experience, get InvoiceBerry’s invoicing software.

4 Finance Documents Every Freelancer Needs

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