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Table of Content
Table of Contents
What Defines a Verbal Contract?When is a Verbal Agreement Legally Binding?How strong is a verbal agreement in court?When are verbal agreements not enforceable?How are Verbal Contracts Enforced?How can you prove and oral contract?Written vs Verbal Contracts: What's the Verdict?Benefits of written contractsSay hello to digital contractsCreate Professional Contracts with Bonsai
3 ways to maintain accounts in Excel as a freelancer
7
Min Read
As a freelancer, you have many balls to juggle, including a number of administrative tasks such as your invoice templates, scope of work templates, or quote templates.
You have to write proposal templates and contract templates, connect those contracts to your freelance invoicing, track your time, and manage multiple projects. You also have to document expenses and manage taxes. You have to monitor payments, including recurring payments.
And you have to get all that information to an accountant at tax time.
While accounting is not the most pleasant job for many freelancers, doing it regularly – and properly – is important to your success.
To accomplish all of this, Excel is one example of an easy-to-access tool. But if you’re not an expert at using its spreadsheets and formulas, that can seem daunting.
So let’s explore how to maintain your accounts in Excel.
Starting with Excel
Excel is a program in the Microsoft Office suite that is perfect for tracking, particularly when it comes to calculating numbers.
You can create tables and charts, and insert formulas that will add, subtract or multiply. You can also convert it to a PDF file to protect the contents, and then email it as necessary.
The work you do in Excel can be as easy or complex as you like. Besides bookkeeping, it can also be a great way to track your clients and freelance contracts.
So let’s look at 3 of the main administrative tasks you have to look after, and how you can use Excel to accomplish them.
1. Track client and contract information
In its simplest form, Excel has blank worksheets with rows and columns that make it easy to use for record keeping.
You can use an Excel accounting spreadsheet to track your clients, including contact information, any follow-up dates, or even contract milestones. You can even track the invoicing of your clients and receipt of payments.
An Excel spreadsheet is easy to navigate and has built-in tables, making it easy to use as a record-keeping program.
Simply open Excel, create the categories you need to track, and populate the worksheet. For a simple record like this, it isn’t necessary to figure out any formulas.
Here’s a simple example of a client tracking worksheet:
The cells in the spreadsheet in this example are perfect to input whatever client information you want to record.
Now, here’s a simple example of contract tracking:
In this example, you are tracking each contract, including start and finish date. Once the contract is complete, you track when you sent an invoice, and when you received payment.
This way, you’ll be able to tell at a glance where you’re at with each client and contract.
2. Track expenses
It’s important to track all your freelance expenses, for several reasons. We offer an online 1099 excel template you could use to do so.
First, it helps you understand where your freelance business is in terms of revenue and costs.
Second, it’s important at tax time. When it comes to knowing what information you will need at tax time, including expenses, reach out to an accountant to be sure you’re keeping all the relevant records. That includes things like tax collection and remittance, as well as expense tracking.
You can use Excel to track your expenses, and create a simple formula to do the appropriate math for you.
Here’s a sample of an expense tracking Excel spreadsheet:
To know the total of all expenses, create a formula and place it in the bottom column of all the amounts.
In our example, in cell F7, you would place the formula: =SUM (F3:F6)
You can also do a shortcut by simply highlighting all the numbers in the column you want to add, and click AutoSum on the Home tab in Excel.
This is an easy way to keep track of your expenses in Excel. It’s a good idea to dedicate time each week to filling out the spreadsheet, so that you don’t get too far behind.
Besides, if you’re dedicated with your account keeping, there’s a good chance you’ll save money when it comes time to pay your accountant. After all, if you don’t do the legwork, the accountant will, and likely charge you by the hour.
In our example, we’ve tracked an advertising expenditure, office expenses and a business license. Depending on advice from your accountant, you may also be able to claim rent for office space, or a portion of home expenses dedicated to a home office.
You can also document expenditures on office equipment, any conferences or professional memberships, insurance premiums, and business lunches. A clear record of expenses helps you calculate your overall profit, and helps your accountant when it comes to any tax payments or refunds.
You can also consider automating your expense tracking. For instance, Bonsai offers a free trial for its services, which include an expense-tracking tool. You can centralize, track and bill expenses online with the click of a button.
3. Keeping tax accounts
It’s important to know exactly what you need to document in terms of any tax you collect as well as tax you pay.
Tax preparation doesn’t happen just once a year. It’s a good idea to have an accountant who will partner with you to ensure you’re maximizing any tax benefits throughout the year, as well as keeping track of all the relevant information. There are important deduction items you need to account for when it comes time for your annual tax return.
Once again, you can use an Excel spreadsheet to document any taxes that you may collect from clients, if applicable. You can maintain accounts in Excel for your taxes in a similar fashion as other expenses. In some instances, it’s valuable to document tax collection separate from other expenses.
As well, when it comes to preparing for tax time, you can also research software options for accounting and taxes.
Then there are options for also automating this work. For instance, Bonsai is integrated with Zapier so that you can use Bonsai with more than 1,000 other tools and software.
Here’s an example.
By creating "Zaps," you establish an integration point so that an invoice paid through Bonsai is automatically sent to a Quickbooks account, for instance.
Other options for maintaining accounts
Now you know the basics of how to maintain accounts in Excel.
But maybe this sounds like too much effort. Or perhaps you don’t have the time to dedicate to building formulas and updating contract status.
Not everyone is savvy with Excel, with spreadsheets and building formulas, or has the time to learn.
With all you have to manage in running your freelance business, maybe it would be better for you to spend your time on other tasks. Things like finding clients, preparing proposals, and doing the actual freelance work, whatever that may be.
You might decide it’s better to do the work you love and get paid for, and find support for your account keeping.
Want to know the best part?
There are a multitude of tools in Bonsai to help your business run smoothly and make your life simpler.
With Bonsai, you can go from proposals to payments and then to tax season. The products are integrated and automated, which means you save time and get paid fast.
The tools that are specific to account keeping include:
- Contract tools with live notifications and auto-invoicing, integrated with your proposals and your timesheets.
- A freelance time tracking tool which allows you to automate invoicing directly from your timesheets.
- An expense-tracking tool that centralizes the tracking and billing of expenses. You can create expenses and assign them to projects, connect to your bank account to import your expenses into the Bonsai dashboard, and get a unified view of your expenses across all projects. You can also attach expenses to invoices or bill directly.
Keeping accurate accounts takes time and effort, but it’s vital to a successful freelance business. Now that you understand how to maintain accounts in Excel, consider the option of the integrated tools available to you as part of Bonsai’s freelance suite by signing up for a free trial now.
What Defines a Verbal Contract?
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
When is a Verbal Agreement Legally Binding?
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
- Offer and acceptance: An offer is made and accepted by another party involved in the agreement;
- Consideration: The involved parties must exchange something of value (money, a service, time, etc), this is known as consideration;
- Intention and certainty: All parties must fully understand the terms of the contract and intend to make a legally binding agreement freely; and
- Capacity: The parties must have the capacity to legally enter into the contract; they're above age and of a stable mindset.
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
How strong is a verbal agreement in court?
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
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get started nowWhen are verbal agreements not enforceable?
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
- The sale of real estate or vehicles
- Real estate leases lasting longer than one year.
- Property transfer following the death of the owner.
- The case of a party agreeing to pay debt for someone else.
- Any contract that requires more than a year to fulfil.
- A contract involving and exceeding a specified amount of money (which varies by state).
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
How are Verbal Contracts Enforced?
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
How can you prove an oral contract?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Written vs Verbal Contracts: What's the Verdict?
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Say hello to digital contracts
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
Benefits of written contracts
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Create Professional Contracts with Bonsai
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?
Join 150,000+ freelancers using Bonsai's free contracts & invoices.
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