Bookkeeping for Freelancers

Working as a freelancer can be a difficult balancing act. Here are some pointers to help you stay on top of your everyday finances.

Recognize the significance of bookkeeping in your business.

Getting paid is one of the most typical worries of freelancers. As a freelancer, you may work with a variety of clients. It might be difficult to keep track of who owes you money, when they owe it, and how much.

If you have any questions about accounting in Croydon, please do not hesitate to contact Cruseburke Accounting Services.

As a result, it's critical for freelancers to understand basic bookkeeping and use bookkeeping software. You'll be able to keep track of unpaid bills and collect payment. When it comes to billing your clients, you will not be short changed. You'll also be able to view the status of your cash flow in real time.

You most likely already have an accountant. If you don't have one, you should get one right away. An accountant, on the other hand, may only evaluate your finances once a year. Bookkeeping provides a more immediate view, especially if you update it on a daily basis. If you find yourself running out of time to keep your books up to date on a regular basis, hiring a bookkeeper will allow you to spend more time doing what you enjoy. Here's how to automate your bookkeeping.

Make a well-organized system.

Good bookkeeping necessitates organisation. You will struggle to manage your funds if you do not have it. So begin as you intend to continue:

Begin immediately once you begin freelancing. Don't put it off, or you'll have trouble remembering every previous transaction.
Speak with a bookkeeper and get their advise. Inquire about the software they employ. It greatly simplifies your life if you both use online accounting software. As a result, you may simply and securely transfer data from anywhere.
Use a well-known accounting system. Accounting software that is up to date will walk you through the usual bookkeeping stages. All you have to do is fill in the blanks and, at first, have it reviewed by a bookkeeping or accounting professional.
Set aside time each week to do your books — if you fall behind, it may be difficult to catch up. Hiring the correct bookkeeper may make or break your business.

Keep track of important aspects of your business.

You should keep track of the following aspects of your business:

your working hours or the jobs performed for each client
each client's fee per hour or per project
your company's expenses (and keep all receipts)
all of your payments, including bank transfers
all monies received from clients

All of this should be recorded in your accounting programme. This data can be used by modern accounting software to:

create precise invoices
generate cash flow statements
Keep note of any money that is owed to you (accounts receivable)
Keep track of the money you owe others (accounts payable)
Determine your greatest – and worst – clients.

There are other advantages to accurate bookkeeping. For example, it implies you're ready if the government ever audits you. It can also be used as proof of income when applying for a home loan or other type of financing.

Deduct your expenses from your taxes.

Many of your expenses as a freelancer can be deducted from your taxes. The rules differ from one country to the next, although you can normally offset things like:

Expenses for travel, but not to and from a regular workplace
Rent for an office, including a room in your home
bills for electricity and utilities
investment on equipment such as a computer, printer, and phone
Phone and internet bills
If you use your car for business, you must maintain it.
Client entertainment expenses are allowable, subject to certain limitations.

So, when performing your bookkeeping, make sure to note all of these facts. To make this process easier, a data capturing app like can interface with your accounting software.

Most of the time, you can only deduct a fraction of your expenses. You may, for example, deduct the rental cost of a single room in your home, but not the entire house. You could also claim fuel expenditures, but only for business-related travel.

Consult your bookkeeper to see what you can offset, and be wary of any hazards. Assume you borrowed money to buy your home. You might be eligible to deduct some of your interest payments from your taxes. However, if you do, you may be required to repay that amount when you sell your house.

Get paid sooner

Getting paid quickly is one of the major advantages of having up-to-date accounts. Many freelancers struggle with collecting payment, but bookkeeping can assist.

Invoice on time and on a regular basis: Creating and sending invoices by email takes only a few minutes. There's no need to enter all of the information again because you've already done so. Simply click and send. More information can be found in our invoicing guide.
Identify late payments quickly: Late payments can be easily identified using up-to-date accounts. An aged summary report will show you who owes what and how far each invoice is past due. You'll quickly figure out which clients are troublesome.
Set reminders — both for your clients and for yourself: You can set up reminders to tell you when an invoice is about to be due. Reminders can also be delivered to the client automatically with current accounting software.
Chase – gently but firmly: If you finished your work to the agreed-upon standard, your client is legally required to pay you. So don't feel bad about pursuing payment. It is, after all, your money.

Set up money for your tax bill.

Unlike a typical employee, you do not have your taxes withheld from your pay. That implies you must plan ahead of time and be disciplined in order to save money for your tax obligation. It's critical to get into the habit so you don't be caught off guard during tax season.

Some freelancers keep separate bank accounts for tax payments only. They can estimate their tax bill using reports from their accounting software. Every month, they set aside the proper percentage of their income. Then they know they'll be able to pay the bill.

You must take this very seriously. If you fail to pay your tax obligation, the government is unlikely to be tolerant. So set aside the money and record it when you perform your bookkeeping.

We provide best accountants for freelancers in Croydon to assist them in dealing with all of their expenses and paying taxes while they continue to do what they love. Yes, we can assist you with your tax returns as well, using our freelancer tax returns.