For freelancers, a cash book is a core financial tool. It provides a clear, real-time record of all the money moving in and out of your business.
What is Cash book?
A cash book is a financial ledger where you record all cash transactions. It logs every payment you receive from clients and every expense you pay out. Think of it as the daily diary for your business's cash flow.
Why is this important?
It gives you instant visibility into your financial health. You can see if you have enough cash for bills and taxes. This record is also crucial for preparing accurate financial statements and simplifying tax filing.
How does it work?
You maintain it by creating two main columns: one for cash received (debit) and one for cash paid (credit). Every time you get paid via a platform or direct transfer, you log it. Every business purchase, from software to supplies, gets recorded on the payment side.
Pros and cons
The main pros are simplicity and real-time cash visibility, which helps with budgeting. The cons include potential for manual error and it only tracks cash, not credit or accruals. For complex finances, you may need more advanced software later.
Conclusion
A cash book is a straightforward yet powerful foundation for freelance finance. By diligently maintaining it, you gain control over your earnings and spending. This simple habit is a key step toward building a sustainable and organized freelance business.
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