Bookkeeping for Freelancers
It’s important for all businesses to keep track of their finances, but if you’re a freelancer it’s vital that you have a good understanding of the figures that make up your accounts. It’s likely that you’ll be working with a number of different clients and it can be tricky keeping on top of what work you’ve completed, what has been invoiced, and which invoices have been paid. So what are the main things you need to know as a freelancer?
Being organised is key
This includes keeping records of all of your expenses (yes, I do mean all of them!), including mileage, and recording how many hours you spend on each client so that you can invoice accordingly. A spreadsheet is a good way of doing this but dedicated accounting software, such as Xero, is even better and will often include handy tools such as sending automatic payment reminders to clients.
Keeping a close eye on things
Depending on whether you operate as a sole trader or limited company, you may already have an accountant, but how often are you actually looking at your finances? You might only be doing this once a year, at tax return time, and are probably concentrating on looking back over the previous year rather than planning for the future. Maintaining your records on a regular basis means that you’ll have a much more up-to-date picture of your business and how it’s performing. Having access to current and complete information also means that you can estimate your tax bill and plan for this throughout the year…no one wants a nasty surprise from HMRC come January!
Cash is king
Cash flow is important to every business, but it’s even more so for freelancers, as you can be more vulnerable to changes in the market. Knowing exactly what expenses you will be incurring in the next few months will help you to put aside enough money to cover your costs, even if your sales that month aren’t as good as normal.
Accurate and complete records
They can be worth their weight in gold when it’s time to submit your self-assessment, and will make completing the return a whole lot easier. Not having an accurate record of your mileage, for example, could mean that you’re missing out on claiming expenses and tax relief that you’re entitled to.
Do you struggle to find time to do your books each week, or maybe you have the time but you just don’t enjoy it? This is where a bookkeeper, often a freelancer themselves and aware of the challenges you may face, can help. Book your free no-obligation consultation today to find out how outsourcing can help keep you on top of your finances.