Episode 5: Accounting 101 for Freelancers
Today I’m super stoked to be joined by my accountant Susan. Susan Watkin is a recognized and sought-after accounting educator, small business advisor, and start-up strategist. Working closely with business owners in all phases of their business life-cycle, Susan strives to help those owners take their businesses to whatever level they want to reach.
In her approachable style, she’s upfront and pulls no punches when it comes to the reality of small business finance and all that it entails so that those she works with are given the tools for their future success. Susan is proud to be recognized as a leader in digital accounting technology, as well as holding a position as a trainer and writer for Intuit Canada, and part-time professor at both Mohawk and Canadore College in Ontario.
PD: Please note that all the information we are covering in this episode relates to Canadian Freelancers. Some of the major concepts can be translated to the US and beyond, but just keep in mind where our area of focus is.
Here’s the following topics we dive into, and questions we have answers for:
Interview Questions Susan Watkin The State of Finance Questions:
2:23 — About Susan, what she does, who she serves and the services she offers.
4:30 — When you work with Freelancers and small business owners, what is their typical level of knowledge on finances, and do you think the school system is lacking in that area, given the rise of the “gig economy”?
Specific Freelancing Questions:
6:55 — SALES TAX: In Canada, when a person first starts out as a sole prop, do they need charge pay tax? If not, should they opt in to paying right away, and what are the advantages of that?
12:35 — REMOTE WORK: Since many people are working remotely, we often work with people in different provinces and across borders. Who do we charge tax to, and how much?
19:17 — INTERNATIONAL CLIENTS: Being remote, there are many times that we deal with US customers. Is it ok to charge in another currency?
23:22 — EXPENSES: Let’s talk about “write-offs”. Can you clarify what a “write off” is? Because many people believe that it’s free money that you get back from the government. What are some major misconceptions about expenses?
27:45 — CRAZY EXPENSES & AUDIT POTENTIAL: What are the allowances of expenses when just starting out, and what’s the craziest thing someone has tried to justify expensing?
31:50 — INCOME TAX: As a general rule, do you have a guideline of how much of your sales you should put aside in the expectation of paying it for tax?
37:05 — INCORPORATE VS SOLE PROP: People most will start off as a sole prop, but as they grow will consider incorporation. Is there a general guideline on when you should start to consider that? I know each case is different, but when should you start the conversation?
44:55 — COMBATTING FINANCIAL OVERWHELM: For people who are overwhelmed by finances and stressed out about numbers, what advice would you give to help them stay on top of their cashflow?
50:58 — STARTING OUT: What’s the 2 major pieces of advice you would give to someone starting from scratch (I’ll also add a couple of my experiences from a Freelance perspective)
53:46 — INVOICING SOFTWARE: Finally, for a Canadian solo-preneur, is there a bookkeeping/online invoicing program you would recommend, also do you need one right out of the gate? (you can add referral links if you have them)
Susan has also given us a wealth of resources. Here is everything mentioned in the episode:
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