As a freelancer today, you can work from anywhere. New freelancers like to live in a city where it's easier to network or source new clients. They might like to choose somewhere where their money will go further, taking into account housing costs, tax rates, and freelancer ecosystems.

Where to live

Profits from your freelancing career can't simply be added into your personal bank account for the following reasons:
<ul>
<li>Mixing personal and business finances can lead to an impossible task at tax season.</li>
<li>You can be personally liable for lawsuits against your business.</li>
<li>You'll fail to build business credit.</li>
</ul>
When you go freelance, open up a business checking account and get a business credit card.

Personal or Business Banking

Keeping track of contracts, invoices, overdue payments, and tax can become a burden.
There are several low-cost and free accounting and business management software options to help you stay on top of your finances. During tax season, it may be useful to make use of a professional accountant.

Accounting help

As a freelancer, you are solely responsible for your retirement. 
Ensure to budget for yourself in this regard. Opening up an IRA or Roth IRA seems to be the obvious step.

Retirement savings

... before going freelance. Health insurance costs will likely mean private, high-deductible insurance plans through the Affordable Care Act.
You may also need liability insurance, depending on your field or your clients.

Consider insurance costs

<div>
Becoming a freelancer--whether you're a copywriter, designer, engineer, or participant in the gig economy--is <a href="https://www.inc.com/christina-desmarais/how-to-know-if-freelancing-is-for-you.html">no longer a pit stop</a> between traditional jobs. For <a href="https://www.inc.com/cameron-albert-deitch/freelancing-in-america-2019-study-career-choice.html">younger workers especially</a>, it's a long-term entrepreneurial career choice all its own. 
When you're a freelancer, you are essentially a sole proprietor business owner. That means the decision to go out on your own isn't quite as simple as filing a W-2 one year and using 1099s the next. You're starting a business of one, with the capacity to <a href="https://www.inc.com/alison-davis/11-simple-ways-to-grow-your-business.html">grow your venture</a> into an employer firm in the future, if things go well. 
So assuming you've decided to go full-time freelance, it's time to start asking yourself some important financial questions. Here are five things that any new freelancer, business owner, or even side hustler should consider: 
1. Where will your money go furthest? 
As a freelancer today, you can most likely work from anywhere. New, young freelancers who want to live in a city where it's easier to network, source new clients, and be around other freelancers (not to mention other benefits of city living, if those appeal to you) may want to choose somewhere where their money goes further. Tech talent doesn't have to live in San Francisco, for example. 
We recently released a report at Fundera that determined <a href="https://www.fundera.com/blog/best-cities-for-freelancers-2020">the top cities for freelancers</a> to live in and work from--taking into account factors like housing costs as a percentage of income, tax rates, and freelancer ecosystems (including the existing freelancer population and how many coffee shops there are per capita). 
Freelancing can be an up-and-down business. Choosing a location where you can save more and live better is a key consideration. 
2. Where will your finances live? 
Profits from your freelancing career will live in the bank, of course--but which bank? You can't simply start funneling your business earnings into your personal bank account. 
For one thing, mixing your personal and business<a href="https://www.inc.com/john-boitnott/5-personal-finance-tips-from-billionaires-michael-bloomberg-warren-buffet-ray-dalio.html?cid=search"> finances</a> leads to a headache come tax season. For another, doing so can leave you personally liable for lawsuits against your business. And finally, you'll fail to build business credit if you use personal finance tools like your personal credit card to pay your business expenses. 
Open up a business checking account and a business credit card as soon as you go freelance. For logistical, financial, and legal reasons, you'll be glad you did. 
3. Do you need accounting help? 
Keeping track of contracts,<a href="https://www.inc.com/amanda-pressner-kreuser/the-best-invoicing-tools-for-small-businesses-freelancers.html?cid=search"> invoices</a>, overdue payments, and, of course, tax responsibilities is where the "business" part of being a freelancer comes into play. Are you prepared to handle these tasks on your own? 
There are a variety of low-cost and even free invoicing, accounting, and business management software options for freelancers. These tools will help you stay on schedule, be paid regularly, and remain in compliance. 
When it comes to tax season, it may be worth enlisting the help of a professional accountant, such as a CPA, to make sure you're making the most of your possible deductions and filling out your forms correctly. 
4. How can you continue to save for retirement? 
The responsibility of saving for <a href="https://www.inc.com/chamberofcommerce/how-to-prepare-for-retirement.html">retirement</a> falls squarely on your shoulders as a freelancer. You can't simply put money into a company-sponsored 401(k) as a freelancer. You'll have to do your own financial planning here. 
Opening up an IRA or Roth IRA is the obvious step, but budgeting for your retirement will be more difficult. Think about it: Whatever your typical by-project fee is, you'll have to take into account not just your time, effort, and skills, as well as a percentage for your taxes, but also enough to put away a bit for your retirement fund. 
Don't be afraid to budget for yourself in this regard. No one else will look out for your financial future except for you. 
5. Can you make enough to cover insurance costs? 
Finally, you'll need to consider the costs of insurance. That means health insurance costs--which, until further notice, will likely continue to mean private, high-deductible insurance plans through the Affordable Care Act. These plans come with hefty fees and don't always offer the most comprehensive coverage, but the alternative--living without insurance--isn't advisable. 
You may also need to invest in <a href="https://www.inc.com/larry-alton/how-important-is-liability-protection-anyway.html">liability insurance</a> (depending on your field and/or your clients), such as professional liability insurance or errors and omissions insurance. 
Committing to an entrepreneurial career path means more than working on your own schedule. It means making the kind of financial decisions that you used to leave up to an employer. Freelancers are business owners, so get ready to think like a CEO, CFO, manager, and employee all rolled into one.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
</div>

Becoming a freelancer--whether you're a copywriter, designer, engineer, or participant in the gig economy--is no longer a pit stop between traditional jobs. For younger workers especially, it's a long-term entrepreneurial career choice all its own. When you're a freelancer, you are essentially a sole proprietor business owner.

5 Financial Questions to Ask Yourself Before Going Freelance

Where to live

Personal or Business Banking

Accounting help

Retirement savings

Consider insurance costs

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