Finance Management Tips and Tools for WordPress Freelancers

Finance Management Tips and Tools for WordPress Freelancers

It’s always exciting when a new year rolls around. So many new opportunities abound and, if last year’s analytics taught you anything, you’re about to have an even more profitable year of business if things keep up.

But finance management as a WordPress freelancer is the pits. It’s just another task that distracts from your web development work. However, until you get to a point where you can scale your WordPress business and outsource that responsibility to an accountant or finance manager, you need to take it seriously.

Whether your WordPress business is brand new or you feel as though you need to tighten the purse strings a bit more this year, then this guide is for you. I’m going to provide you with various finance management tips and tools you can use to get your cash flow in order.

7 Finance Management Tips and Tools for WordPress Freelancers

Here’s some good news: 60% of freelancers make more money now than they when they worked a traditional full-time job. Even more exciting? 78% of them claim that it only took a year of freelancing to exceed the their previous salary.

I think that calls for a celebration.

Let’s take a moment to celebrate with Sam Rockwell’s dance moves.

So, it is possible to do very well working as a WordPress freelancer. But what’s the key to continued success and the ability to keep your business in the black and out of the red? Sticking to a tried-and-true finance management strategy.

Here are 7 tips and tools you’re going to need if you want to keep your WordPress freelance services alive and thriving in the years to come.

1. Create Separate Accounts

Finance Management - Bank of America
You can centralize all your banking needs with Bank of America.

Similar to how you should create a professional workspace that’s separate from the rest of your home and life, you should do the same with your money. It’ll be easier to keep track of money coming in and out if you create dedicated accounts for your business and don’t let the personal stuff spill over.

Here are some tips on how you can divvy up your accounts to keep everything separate:

  • Personal checking account to pay for personal expenses.
  • Business checking account to pay for business expenses. This includes things like rent, WordPress themes and plugins, conference fees, Internet and smartphone usage, meals with clients, and so on.
  • Savings account that contains, at the very least, four to six months’ worth of rent. Consider this your “rainy day” fund in case clients disappear or you should have to temporarily close up shop.
  • 401k that you contribute to on a regular basis. Without an employer to take care of your future retirement savings, you need to factor this into your budget now.

If you can open and manage each of these accounts with the same provider, that’s even better. Bank of America happens to be one of my favorites since you can sync your Merrill Edge 401k investments to your checking and savings accounts, and monitor it all from one interface.

2. Set a Budget

There are two expenses that I most certainly do not miss from working outside the home and for someone else:

  1. Commuting to and from work.
  2. Being tempted to eat out for lunch every day. Or getting a coffee at the train station every morning. Or grabbing a drink after work with coworkers on Friday (and sometimes Wednesday and Thursday).

Needless to say, it’s easy to spend money when you’re away from home. Luckily, as freelancers, that’s not something you have to worry about too much. Nevertheless, there are still costs you have to manage for your business and you don’t want them to get out of control.

The best way to manage your WordPress business expenses is to, first, review what you spent money on in the previous year. Then, note them down along with how much money you spent each month as well as for the entire year. This should be your baseline going into the new year.

If your business is brand new, make a list of all the business expenses you know you will be paying for in the coming year. This will include things like:

  • Rent and utilities
  • WordPress-associated costs: theme, plugins, hosting, domain, CDN, SSL certificate, etc.
  • Marketing
  • Health insurance
  • New equipment (like a computer or phone) or software (like Photoshop or Basecamp)
  • Business licenses
  • And whatever else you can think of that you know you need to start or run your business

This budget, when compared against your incoming revenue, will help you make important financial decisions about your business in the future.

3. Set Revenue Goals

Finance Management - Harvest
Time-tracking apps like Harvest and Toggl will give you better insights into how much each project actually nets you.

It’s not enough to say that your hourly rate is $X or that you charge a certain flat rate for WordPress development projects. Unless you’ve really drilled down into how much you’re spending, how much you’re earning, and what that all actually means for you in terms of profit, an arbitrary rate of payment isn’t going to help you.

So, once you know how much money is flowing out of your business every month, now it’s time to set your revenue goals to ensure that you stay in the black each and every month. Here is what you need to do:

  1. Define your services and tackle the profitability assessment of each one-by-one.
  2. Allocate a set number of hours needed to effectively provide each service. If you’re unsure of what this should be, use a time tracker to calculate the actual hours spent (there are some helpful suggestions for time management apps).
  3. Attach an hourly charge to this calculation, whether it’s your current rate or what you believe to be a fair one for that service.
  4. Multiply the number of total hours by your rate (#3 x #2). This is the total you’ll charge your client for the service.
  5. Add in a percentage of your total business costs here. If your services are billed monthly, then divide your expenses by 12. If your services are billed per project, then divide your expenses by the number of total projects you’ll complete each year.
  6. Subtract those costs from the total client rate to calculate your profit (#4 – #5).
  7. Tack on whatever your invoicing processor’s fees are. PayPal’s transaction fees, for example, are 2.9% plus $0.30.
  8. Subtract your fees from your profit (#6 – #7).
  9. Don’t forget to factor in taxes, too. (I’ll dig into that down below.)
  10. Subtract your estimated taxes (monthly or per-project) from your profit as well (#8 – #9).
  11. Now, think about the timeline each one of these services or projects requires. If it’s a monthly service, that will be easy to calculate. Multiply your final profit number (#10) by 12. If you’re looking at the cost per web development project, then consider how many you can handle in a year’s time, whether individually or simultaneously. The total number of projects should then be multiplied by your profit (#10).

The number you end up with is your take-home revenue at the end of the year, so long as there aren’t any major mishaps along the way. Is that number enough to pay for your cost of living? If you have employees, do you have enough to pay them on time and as agreed upon? And will that be enough to scale your business to the next phase?

If not, then start at the beginning and adjust your rates. Re-run the calculations until you have a profit margin that you are comfortable with.

4. Play Out Tax Payments

If you live in the United States, then you know how stressful tax season can get. As a freelancer, however, you now have four tax “seasons” to worry about. As of 2018, this is when they occur:

  • April 15: You owe estimated taxes for January 1 through March 31. You may also owe additional money if your tax filing deems it so.
  • June 15: You owe estimated taxes for April 1 through May 31.
  • September 15: You owe estimated taxes for June 1 through August 31.
  • January 15: You owe estimated taxes for September 1 through December 31.

For most of you, the federal tax rate is about 25% of your income. To play it safe, consider paying more than that each quarter. You’ll then have to review your local and state tax laws to find out how much you owe.

Once you have an idea of how much money you’ll owe the government each quarter and year, create a “schedule” of payments you can put aside into one of your accounts; ideally, into your business checking account. This will ensure you don’t have to dip into your personal savings or rainy-day fund to make those payments when they’re due.

5. Record Everything Related to Finances

When I first started freelancing, I turned to the one tool I’d always relied on at previous jobs: Excel. Ugh, I can tell you right now that that was a huge mistake. Never try to track your business’s profit and losses in a spreadsheet. It’s not that it can’t be done, it’s just incredibly labor-intensive.

That said, you should use something to keep this system of finance management on the rails. Hiring an accountant might not be feasible right now, so I’d recommend using bookkeeping software. If you’re looking to keep software costs low and productivity high, I’d recommend using one of the following small business finance management tools:


Finance Management - FreshBooks
FreshBooks has a comprehensive offering of accounting and invoice management tools.

FreshBooks is great because it attempts to cover all your finance management needs in one place, including:

  • Expense tracking and organization
  • Time tracking
  • Invoice generation
  • Payment collection
  • Team collaboration (though you probably won’t need this feature just yet)


Finance Management - QuickBooks
Want to make tax season a breeze? QuickBooks syncs into TurboTax to make that a reality for freelancers.

QuickBooks (especially the Self-Employed package) is the one I’ll throw all my weight behind. It’s similar to FreshBooks in that it helps freelancers like yourself track every expense and also manage your invoices. However, it differs in a number of key areas that I think make this an incredibly indispensable tool:

For starters, you can create “smart” rules that automatically categorize your spending and income, so there’s less work for you to do at the end of the year. Which then leads into this:

QuickBooks is owned by Intuit, who also happens to own TurboTax. So, guess what that means? That’s right. Every transaction captured by QuickBooks is seamlessly integrated into your tax software at the end of the year. This equates to less tax time preparation and more time to focus on your work in Q1.

6. Pay Attention to Payments

Finance Management - PayPal
You’ll be hard-pressed to find a client that can’t or won’t be able to use PayPal.

One of the hardest parts about going into business for yourself is discovering that not every client can be trusted. You want to believe that, when you provide a good service, you’ll be paid in kind by your clients. You also want to believe that they’ll respect your time and process, and not disrupt the work you do for others (or blow your budget entirely). But that’s not always the case.

In order to ensure that you’ve protected yourself and will get paid for your work, here is what you need to do:

  • Create an iron-clad contract that documents your project fee schedule, timelines, penalties for non-payment, etc.
  • Don’t take jobs that don’t pay well and definitely don’t work with clients if your spidey-senses tell you they’re going to have a hard time paying (or put up a fight about it) .
  • Learn how to keep your client’s feedback in check, so you don’t end up losing money for unwieldy projects.
  • Use a payment processor like PayPal that everyone knows and trusts. There should be no excuses that they can’t pay you through PayPal. It’s also faster to get that money into your account if you’re not dealing with cash or checks.
  • Pay close attention to your invoices and missed deadlines on those payments. Don’t be afraid to contact your clients and enforce the failure-to-pay rules laid out in the contract.

7. Review Finances Monthly

Finance management is a lot like WordPress; take your eyes off it for just one month and you might have an unpleasant surprise waiting for you when you finally come back to it. But, unlike something like a broken pop-up that can quickly easily be fixed, trouble with your finances doesn’t always have a simple Band-Aid solution.

For your WordPress site, you use a variety of analytics and monitoring tools to ensure that everything stays on track. For finance management of your WordPress business, you need to do the same.

Each of the finance management tools I’ve mentioned above–PayPal, time trackers, bookkeeping software, banking services, and so on–come with built-in analytics. My recommendation is that you create a system of reports for each. You’ll then need to review your financial performance (money going both in and out of your business) on a monthly schedule as well as yearly.

As you begin to notice trends or differences between your goals and reality, you can adjust your business accordingly. Perhaps your rates need to change as your services become more complex and time-consuming. Perhaps you need to start hiring people once you realize you have the additional funds to do so. Or perhaps you discover that certain times of year are busier than others and you can finally schedule that vacation you’ve been wanting to take. Just be mindful of your finances so you can make these sort of educated decisions.

Wrapping Up

Your business’s cash flow should always be top-of-mind, no matter how stressful it may be to look at rising costs or that next big tax payment you owe the government. As we move further into the year and tax season approaches, now is the time to get your finance management in order so you can worry about it less in the future.

For those of you using an accountant, do you find that the cost is worth it just so you don’t have to worry about your finances?

Suzanne Scacca

Suzanne Scacca Suzanne is a former WordPress implementer, trainer, and agency manager who works as a freelance copywriter. Suzanne writes about WordPress, SEO, web design, and marketing. She is Also a creator of website-building and SEO courses on Skillshare. You can follow her on Twitter.