Correct financial planning helps aid anxiety in times of low business for sole traders. COVID-19 has hit Australia hard, and sex workers even harder. What would make this easier on everyone is being financially secure.
How does one start to be financially secure? It may seem too little too late if you’ve yet to save for that rainy day, but there are ways you can change your spending and saving habits now to reduce the impact, especially when it’s impossible to gauge the length of this economic downturn.
Rainy Day Emergency Funds
Let’s start off by talking about your rainy-day emergency fund. Having a separate bank account for your emergency savings fund is essential as a sole trader. A great way you can work this bank account is to set this up with an automatic withdrawal from your ‘Everyday’ account to save money. Have the account with a separate banking institution, or removing it from being accessible by your online banking to reduce the urge to spend it. Automatically saving $10 or $20 dollars per week all adds up, even if it doesn’t sound like much.
How Much Should I Have Saved?
Empire would suggest you have 3-4 months of living expenses in this account. Living expenses would include rent, bills and food (nails if they are also a necessity!). It is a good idea to already know how much your outgoings are each month and then times this by the number of months you want to save for! You can start saving slowly for this over time, as this emergency fund may only be needed once every few years, or not even at all! The plus side to this is if you don’t need to touch your savings, you accrue interest on the balance which is a great benefit.
Track Your Earnings!
We cannot stress this enough. Being aware of how much you are earning is very important in general and especially when we may need to tighten our purse strings. If you are aware that you made $1,000 this week and suddenly its Sunday night and you have nothing left, then maybe you need to see where this money is going and re evaluate your spending.
“What you measure is what gets improved” – If you aren’t tracking and “measuring” your income how can it improve? Once you see how much you are earning you can improve this, by either making more, or in quiet times, spending less. Empire’s bookkeeping packages do all of this for you. We send you out a quarterly report with the information that is relevant to you. Empire tracks your spending and reconciles your accounts, all in preparation for your tax return.
How Empire Can Help You Now
If you are a Sole Trader experiencing financial hardship and applying for Centrelink payments, there is quite a lot of paperwork that you may need assistance completing. This includes:
- Assets & Liabilities Report
- Profit & Loss Report
If you are a current bookkeeping subscription client, we will assist you with your application at no charge. If you are not a bookkeeping client, we would still like to help you as best we can and will offer this service to you at a low fee of $50 which is more than 75% saving in standard practice fees. We will deduct the $50 from your FY20 tax return preparation and lodgement fee as a percentage of the workings can be applied to this.
For non-clients, we will be required to on-board you as a client to our practice and calculate your income and expenses from bank statements/transaction documents. We will be offering this low rate fee until 30/06/2020.
Please reach out to Empire, we are here to help you. We are in this together.