How to fall in love with the admin side of freelancing
As I celebrate my 7th business birthday, I came to the realisation the admin side of things pretty much flows in my freelance business. French specificities aside, through the years I’ve created a system to make things easier for me, and I thought I’d share what this looks like right now. The goals for this system are to:
Make sure I’m playing by the rules
Take care of myself financially
Offers smooth administrative experience for my clients
Learn the rules (and follow them!)
I mean, you have to start there and do your very best to learn and understand the rules and laws in your country. If I could figure it out, you can too.
Get some help from the experts
Hey, you’re probably not an accountant (if you are, hi! 👋). Whether it’s to figure out the ins and outs of accounting, or something specific regarding your situation, get help. Administrative tasks can be scary the first time you have to do them and one hour with an accountant can change everything.
Use the Profit First method to avoid stress
For years, I used one bank account for all my business stuff. I would half wing it, half recalculate how much I needed for taxes and to pay myself every month. It was a mess.
Then I stumbled upon a post by Alice Benham where she mentioned a book called Profit First. Simply put, it’s a method for managing business finances that works like the envelopes budgeting system, with an emphasis put on automation and well, profit.
I’ve been using a customised version of this method for a few years now and it took tons of mental load off my shoulders. Here’s the way I do it (for now):
I set aside fixed percentages of my income
I distribute my income in 4 accounts:
Profit → This goes on a savings account. Every quarter I take 50% and this money is solely used for fun stuff for myself. Think of is as my quarterly bonus.
Owner’s compensation → This is for my monthly salary. I transfer a fixed amount every month to my personal account for my regular expenses. I keep 2-moths worth of salary on the account and every quarter I put the rest on a savings account.
Tax → You guessed it, it’s for taxes. This includes quarterly tax payments, yearly tax payments and VAT. It’s also on a savings account.
Opex→ This is for business expenses and it’s the smallest percentage of the list.
What do those percentages look like? The distribution of the allocation of money evolves with time. It’s tricky for me to give you an exact figure because it has changed and will continue to move around as my needs evolve.
That’s where you’re going to say: “Thanks, but how on earth to I determine my percentages?” Here’s how I proceeded to find my first distribution, hopefully it can help you too:
Look at how much you earned in the past year or so, and look at your expenses. How does that look like?
Start with taxes. This should be a fairly easy number to figure out. Remember to add in extra “forgotten” taxes, not just the quarterly or monthly ones. For example, in France we have a once per year tax for office spaces that somehow always comes as a surprise to me. Well, not any more. If you consistently invoice VAT, add that in also.
Then move on to your personal monthly expenses. How much do you need to earn from your business to live? Do a bit of math, add in a little extra for personal savings, do a bit more math and that’s your owner’s compensation number.
With what is left, allocate a MINIMUM of 1% to profit. That’s where I started. That’s your personal “have fun, you deserve it” money.
Fun fact, the first thing I bought myself with that money was a limited signed edition book I’d been eying for ages. Before, I saw it as a 100 € extravaganza I didn’t need in my life. After, it became a 100 € investment in my happiness and a gift from my business to myself. See what I mean?
Then, whatever is left is your opex money, the money you will use to get your business running. You might have a feeling that it’s not much, and you’d be right. As it turns out, you can run your freelance business in a very cheap way!
NB: If what you have got left for your business expenses does not cover your basic expenses, check the following:
Are there ways to do some stuff cheaper? Do you need a fancy accounting software? Can you cut out a few coworking space days to work from home?
Are you sure you integrate the cost of your tools in the services you offer? Aren’t you undervaluing your services?
What if money starts to pile up in one area? Every quarter, I make sure to keep a maximum of 2-months worth of salary on my owners compensation account. The the rest goes to savings. If this situation happens more than once, I recommend re-evaluating your percentages. That doesn’t mean the extra money should all go to your opex account! That means you can pay yourself more and set more money aside for your personal projects 😉
How long does this take? The setup took me a few hours, mainly because my finances were all over the place. To maintain this system, twice a month, I take 10 minutes to distribute the money I received in each account. I have a little Google Sheets file that does the calculations for me.
Every quarter, I take 50% of the profit account, pay my taxes, and make sure the current percentages I use still work for me. For example, I recently realised I was putting too much aside for taxes and adjusted the ratios.
Other money goals to consider
I’ve just scratched the surface here, but you should also consider researching the following:
Emergency fund: that’s enough money to get you through 3 to 6 months - or maybe more - or living expenses, in case you get sick, if you have a rough period or if everyone suddenly decides AI can do your job and you need time to understand they got it wrong.
Fuck you money: this is similar to an emergency fund, but it’s sole purpose is to enable you to say no to a project you don’t feel like doing, or to fire an bad client in a way that puts a smile on your face 🙂 Check out this episode with Olga Zarr and Myriam Jessier to learn more.
Celebrate the wins, all the wins
I often get caught up in the day-to-day tasks and forget to take a step back to celebrate my accomplishments. However, celebrating wins is an important part of maintaining a positive mindset and staying motivated. Here are a few ways I do this:
Keep a record of your achievements. I track all my projects in Notion and have a template for each project that I complete once the project is done. This includes what went well, what were the challenges, what I learned, positive client feedback, etc. It also includes some SEO-related information, like the strategies used in the project, key findings and first results.
Share your wins with others. Whether it's with friends, family, or fellow freelancers, I try to share my accomplishments. Not in a bragging way. But since I pour my heart in my business every day, I ought to share with the ones that support me the good stuff.
Celebrating your wins doesn't have to be a big production. Even taking a few minutes to acknowledge your accomplishments can go a long way in maintaining a positive mindset and staying motivated.
Create the perfect admin flow for your clients and yourself
Admin is probably not the primary reason you started freelancing and it shouldn’t take you too much time.
For me, this starts by creating client proposals that excite me. There’s nothing motivating in having an excel file with more numbers than personality. So I try to make my proposals interesting, descriptive and enthusiastic, that work for my client, and for myself.
My proposals answer nearly all questions my clients might have. Every time someone asks a new question, it goes in the proposal template
Once the proposal is accepted, I use an accounting software to create the quote and the invoices. They are simple and straight to the point. Any regular invoice is sent automatically on a monthly basis to the client.
When it comes to payment, my clients have all the necessary bank detail on all administrative documents, and have the option to pay by Stripe by card in just a couple of clicks.
In the unfortunate event that I don’t get paid in due time and need to send a reminder, I send it through my accounting software, using a template I tweak in under 30 seconds.
Creating the perfect admin flow in an on-going process. I still haven’t figured out how to get client testimonials on a regular basis or how to create a custom proposal in record time. I’m open to suggestions 🙂
Set a recurring events in your calendar
Twice a month, I have a recurring 30-minutes time slot in my calendar to go through invoices and make sure I’ve been paid on time. If not, that’s when I send a reminder. I also do my profit first bank transfers at that moment, using a simple spreadsheet to calculate everything for me.
Most of the time, this really takes less than 15-minutes.
Every quarter I have a time slot to pay my taxes and check my Profit First percentages. I also look at my calendar and count the number of days I took off the previous quarter. It’s important to take time off and to actually track it. Think of it like a meeting your manager, except you are the manager.
I personally try to take at least as many days off as required by French law.
Finally every 6 months, I promote myself. I look at the projects I’ve accomplished, my wins and areas of improvement, training I did and training I could do, conferences I attended, etc. With all this in mind, I always decide to give myself a promotion, even if it’s a small one. This can mean updating my prices, increasing my salary, or even giving myself benefits.
You might be thinking I’ve gone crazy, but hear me out. If I were the top manager at a thriving company, they’d want to keep me as long as possible. Compensation aside, I might stay longer if I got some privileges: better coffee (that’s an important one for me), extra paid leave, a upgrade in my working environment, etc. I don’t yet have a specific process for this, but that’s when I plan interesting upgrades to buy for my home office (new keyboard, larger screen, better lighting…). The thing is, if I don’t take the time to improve my working conditions, no one will do it for me.
Be open about your finances with your clients, peers and close ones
To your clients, be transparent about the importance of being paid on time. Make sure you are clear and upfront about your payment terms. Your job is not to chase money. You should also take deposits before starting any work. I always take a 50% deposit for one time projects.
To your peers, talk about money! The more you share the better for everyone! The cake is big enough for everyone to get a good slice, so do your part and make that cake bigger!
To your close ones, be transparent. Freelancing means irregular income and they should be aware of that. It’s added stress and a different perspective on owning your income.
As a freelance you are 100% in charge of your income. You are not subject to annual reviews or wonky promotions (hello +50€/year as a thanks for working your butt off 👎). So, be proud of what you earn, no matter the amount. Going freelance is a very brave move and you should be amazed at how far you’ve gone. I sure am.
I went slightly overboard…
I started this post think it would be a nice and short one. Turns out I’ve poured 7+ years of learnings in over 2000 words! 😅
To conclude, falling in love with the admin side of freelancing is not as hard as it seems. By learning the rules, seeking help when needed, using the Profit First system to manage finances, celebrating wins, mastering your admin flow, automating, and being open about your finances, you can make the admin side of things run smoothly.
Remember that freelancing is a brave and challenging journey, and you should be proud of yourself for taking that leap of faith. Celebrate your accomplishments, no matter how small, and keep learning and growing.
PS: I’m considering offering a mentorship program at some point in the future, for freelancers, SEOs or SEO freelancers. If this sounds like something you’d be interested in, let me know!
