Importance of an Online Current Account for Freelancers

Posted on Thursday, August 22nd, 2024 | By IndusInd Bank

Freelancers usually have the liberty to work according to their comfort levels and skill sets. However, as they do not earn a fixed salary, they are required to manage their client payments and expenses by themselves and might face unique challenges in managing their finances efficiently.

Dedicated bank accounts for freelancers help them organise and structure their finances. For instance, a current account is a financial ally that helps freelancers manage their finances. Freelancers should open a Current Account to experience financial independence.

Current Account – Role in the Financial Universe of an Individual in Freelancing

The features of a Current Account must provide financial freedom to freelancers. Yes, a Current Account for Freelancers aims at facilitating transactions, cash flow management and keeping finances distinct.

Reasons Why Freelancers Must Open a Current Account:

1. Efficient Management of Cash Flow:
   A Current Account simplifies the tracking of income and expenditure, thus aiding in better management of cash flow. It helps you as a freelancer to manage your income from different projects easily.

2. Facilitation of Seamless Transactions:
   Freelancers need to open a Current Account to gain access to a secure and efficient platform for their transactions. A Current Account also enhances the overall image of the freelancer as a professional. An online Current Account helps you in settling your payments quickly and at your convenience 24/7.

3. Distinct Financial Identities:
   A Current Account helps freelancers to keep their personal and business income separate. This helps in maintaining the records and accurate filing of tax.

Also Read: Why Current Account for Freelancers is a Must?

Importance of a Current Account for an Individual in Freelancing

1. Separation of Personal and Business Finances:
   A Current Account is useful in keeping the personal and work-related income and expenditure of a freelancer distinct from each other. You may thus maintain accurate financial records, which will help you in correctly maintaining your records. This segregation also helps you to calculate your tax correctly and file your returns efficiently.

2. Overdraft Facility:
   Another advantage for freelancers to open a Current Account is the Bank Overdraft facility many banks offer. This is a pre-approved limit you can withdraw over and above the balance available in your Current Account. An Overdraft facility will help you, as a freelancer, to bridge the gap between your receipts circle and your payments.

3. Business Loans:
   It is imperative for a freelancer to open a Current Account to build up a favourable financial record. As a freelancer, you can access business loans only if you maintain a Current Account. You may need a business loan to fund business expansion or to diversify your business to get access to alternate revenue streams.

4. Payment Collection Options:
   Cashless transactions are the order of the day, and the usage of card and digital transactions is widespread. You may apply for a POS machine or even a Payment Gateway with a Current Account. In continuance with the segregation of personal and business transactions, you may use a QR code, or a UPI ID linked to your Current Account for overall convenience.

5. Tax Calculation and Management:
   A Current Account will help a freelancer maintain a distinct and accurate financial record of your receipts and expenses on account of your business. You may easily calculate your tax liability and file accurate tax returns.

Also Read: How to Choose the Ideal Current Account for Freelancers and Small Scale Businesses

Conclusion

As a freelancer, you need to open a separate Current Account to organise your transactions and your payments efficiently. An online Current Account further provides a secure platform for you to carry out your payments swiftly at your convenience. It provides you with a professional image and helps you further get access to credit facilities from your bank in the future.

Disclaimer: 

The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.