The Accidental Evolution of a Freelancer

Posted 3 January 2013

Few people plan to be sole traders. It mostly just creeps up on you.

As a sole trader, there’s a fair chance you began your career as full time employee of another company. You could have been in a junior position in your chosen field, or you could have been stacking boxes or flipping burgers to make ends meet.

Then, one day, a friend or family member asks to utilise your talents in a business-like way. Perhaps you’re musically gifted, and your uncle on the school board asks you to pen a melody for a school play. Maybe you have a strong physique and your elderly neighbour needs some lawn maintenance. You could be an arts graduate, looking for work when the girl from your Thursday Japanese class needs her wedding invitations designed. Whatever your trade, chances are that your first job came from someone you know.

You’re keen as curry to contribute, and will probably take whatever minuscule sum is offered. If you’re lucky, they’ll even pay cash.

If, on the other hand, you want to do the right thing by the tax man, you’ll need to issue an invoice. After a big of Googling or a couple of phone calls, you’ll learn that you need one of those Australian Business Number thingies.

Ew. That doesn’t sound like fun.

Still, with your shiny new career blooming on the horizon, it’s worth the effort to do it right, so you call the stupid tax office, fill out the stupid forms, and get the stupid ABN. They’ll probably ask if you want to register for GST, and you’ll say “no”, because who would want to do that?

A few days later, you receive a letter with your new ABN. Awesome! Now you can issue invoices! You type up a very professional-looking invoice with your nice new ABN displayed prominently to show that you’re a true professional, worthy of whatever fee you’ve just received. You deliver it to your client, perfectly folded in a sealed envelope, and enjoy the fruits of your labour in whatever way gives you suitable pleasure.

Then, around the end of the quarter-year, you get an irritating letter in the mail. They want you to fill out an activities statement.

A what? What is this? Who sent you this nonsense? Is it something everyone has to do, or just real businesses?

As you pose these questions to yourself, you realise that you quite inconveniently became a real business when you signed that damnable ABN form. Now you must face a life of perpetual depressing paperwork.

Crap.

For a lot of us, this is where we question if it’s all worthwhile. Wouldn’t it be simpler to just work for someone else who can handle this stuff for you? After all, you’re not an accountant. This is someone else’s job that you’ve been asked to do. You’re not qualified and you feel especially out of your element.

This is where you can go a number of ways. If you’re a true artistic genius, you’ll probably stuff this form into the corner of the cupboard with all the other unwanted paperwork. Out of sight is out of mind, and you’re far too small for the tax people to chase.

If you’re a little less brave, you’ll saturate your desk with the past year’s paperwork and cobble a few sums together. If you’re computer savvy, you might even design a spreadsheet to keep it neat and tidy.

That’s actually not a bad system. You can keep a running total of how much you’ve earned, how much you’ve spent, and the GST associated with both. Magnificent! Who needs accounting software? This is cheaper, easier and faster.

After some time, however, you find cracks in your home-made bookkeeping solution. Every time you issue or adjust an invoice, you have to reflect those changes in your spreadsheet. You have no way of tracking which invoices are unpaid, and you have to keep your spreadsheet up-to-date with the payments you receive. You have expenses that are only partially deductible, so you have to get your calculator out every time you record them.

This may feel like 90% of your story, or it could only be 30%. Our experiences as sole traders vary dramatically, but most of us have one thing in common: we are good at our jobs, but not so keen on the tasks imposed upon us by our Government.

This is, hit for hit, the story that led me to create Bfast. Regular invoicing software just didn’t cut it. I wanted something Australian, suitable for my purposes, without having to minor in accountancy to get there. It was a fairly simple recipe: I took my requirements for running my business and used them as the blueprint for a cloud-based app that I could share with others in my position.

My hope is that, if any of this story rings true for you, you’ll appreciate that you’re not alone. Like most problems we face in the 21st century, someone else has experienced the same problem, and provided a solution on the Internet.