5 Money Management Tips for Independent Contractors

BRANDI MCKAY, client accounting services manager

It’s nice to get a steady paycheck; you know how much money is coming in, and when. However, when you became self-employed, You left that behind knowing that you’d probably face some financial unpredictability. But there are steps you can take to avoid being in a constant state of uncertainty. Here are five of them.


Keep your business and personal accounts separate

Let your business checking account “pay” your personal account; transfer income over when needed. You don’t want your home utility bill and grocery tab mixed in with your business insurance and office expenses. It makes it impossible to get a true reading of your company’s financial status.


Don’t cheat yourself when you’re pitching jobs

If you’re in a position to bid on work, don’t ask for less than you need. Undervaluing the skills you bring to a project will make some potential customers think that you can’t deliver the quality they need. Keep in mind that what you’re paid has to cover expenses like insurance, overhead, benefits, savings, and taxes.


Create dual budgets

Frustrating as they can be to create (and follow), budgets are a must for independent contractors. You’ll have clients who won’t pay when they’re supposed to, and you’ll have dry periods when your work is slow. Put together two separate budgets, one for your company’s needs and one for its wants. Dip into the latter only during those periods when work and money are rolling in.


Never have a low balance in your business savings account

Many experts recommend that you have at least six months’ worth of living expenses saved in case you get sick or injured; you lose an important client; or you’re not bringing in money for some other reason for more than a week or so. It’d be great if you could have set this aside before you became self-employed, but this may not have happened.

If that’s not possible, prepare yourself for down times in other ways:

  • Consider getting a line of credit and only draw on it for emergencies.
  • Keep your credit score in the upper ranges in case the worst happens and you have to actually take out a loan to keep going.
  • Put together a business plan. You’ll need this if you request a loan, and it’s a good tool that can help keep you focused. It doesn’t have to be dozens of pages. You may even be able to condense it down to one page (minus any financial charts).


Let an expert step in

You should be focusing your time and energy on improving your company’s products or services and finding buyers for them – not wrestling with spreadsheets. We can assist you with basic bookkeeping, reports and taxes. Let’s connect and discuss the possibilities.




Brandi McKay is a Client Accounting Services Manager at Lutz with over seven years of experience in accounting. She is responsible for providing outsourced accounting services to clients with a focus in payroll compliance.

  • Outsourced Accounting
  • Tax & Payroll Compliance
  • Healthcare Industry
  • QuickBooks
  • Medical Group Management Association, Past Member
  • Nebraska Medical Group Management Association, Past Member
  • MPA, University of Nebraska, Lincoln, NE
  • BSBA in Accounting, University of Nebraska, Lincoln, NE


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