Bookkeeping for Freelancers

With over two million freelancers in the Croydon, UK, the industry provides over £125 billion to the economy (source: Microbizmag.org), with the number of freelancers increasing by nearly 50% in the last decade.

A huge proportion of self-employed freelancers handle their own bookkeeping, while others see the value of hiring professional bookkeepers.

What is the distinction between a contractor and a freelancer?

Freelancers typically work as solo proprietors. They are typically compensated on an hourly or daily basis, as agreed upon with clients. They frequently work for more than one client at the same time. They are personally accountable for handling all aspects of their finances if they are sole proprietors. Some freelancers form their own limited businesses, mainly to avoid personal taxation in favour of corporation taxation.

Contractors typically perform work for a certain client for a set length of time at a set charge. They can operate as sole proprietors, although the majority of contracts are allocated to individuals who supply services through limited liability corporations.

CruseBurke Bookkeeping Solutions will help you manage your money whether you are a sole trader or a limited company, and whether you are a freelancer or a contractor. We will maintain your books in order, allowing you to devote your time and focus to your primary areas of competence.

What exactly is freelance bookkeeping?

Freelancers are experts in a variety of fields. According to a MoneySupemarket poll, the most common freelancing roles are business services (22%), design (20%), writing and translation (17%), and sales and marketing (17%). (13 percent ).

The issue for freelancers is not just finding and doing paid work, but also managing their funds. It is critical to maintain control over all financial aspects of freelancing and to have a clear picture of your genuine financial condition.

It is critical for freelancers to keep precise, accurate financial records for all aspects of their employment. If you utilise incorrect figures, you may be paying too much or too little tax, and you may be underestimating your genuine earnings. We assist clients in avoiding potential traps, allowing them to focus on their main money-making skills.

Bookkeeping for freelancers and sole proprietors

The simplest approach to manage freelancer funds is to register as a sole trader with HMRC. Nonetheless, there is a list of financial information that you must handle.

You must preserve the following records:

• all sales and earnings

• each and every business expense

• If you are VAT registered, you must keep VAT records.

• If you employ individuals, you must keep PAYE records.

• information regarding your personal income

• your grant if you received it under the Self-Employed Income Support Scheme as a result of coronavirus

VAT registration is only necessary for enterprises having a taxable turnover of more than £85,000.

It is also critical to retain proof of:

• all goods and stock receipts

• bank statements, stubs of chequebooks

• invoices for sales, till rolls, and bank slips

You now have the exact data for your tax return as well as evidence for HMRC if they ask.

Every year, sole proprietors must:

• Every year, you must file a Self Assessment tax return.

• You must pay Income Tax on your profits as well as Class 2 and Class 4 National Insurance.

CruseBurke bookkeeping manages the books for freelancers who work as lone proprietors. We assist in ensuring that information is accurate and delivered on time for tax returns and payments.

Is it better to use traditional accounting or cash basis accounting?

As a sole proprietor, you have the option of using standard accounting or cash basis accounting.

Traditional accounting determines your income and expenses based on the dates of your invoices and bills. Invoices and bills issued within a tax year are taxed in that year.

Cash basis accounting requires you to record income and costs only when you get money or pay a bill. This implies you won't have to pay Income Tax on funds you haven't received yet in your accounting period. Only enterprises with a turnover of £150,000 or less are permitted to use cash basis accounting.

Bookkeeping for freelancers with small businesses

If you are the director of a limited business, you can function similarly to a sole trader and do the same type of freelancing or contract work. However, the legal position of a business differs greatly from that of an individual. Your business is a legal entity distinct from your personal status. A lone trader is individually liable for business debts, whereas a limited company is liable for commercial debts.

As a director, you must file a self-assessment tax return that details the taxable revenue generated by your company. In addition, your company must file an annual return and Company Accounts with Companies House, as well as an annual company tax return (form CT600) with HMRC.

As a limited company director, you must:

• Maintain company records and notify any changes

• Accounts and a Company Tax Return must be filed.

• Corporation Tax is paid

CruseBurke bookkeeping is headed by accountants, and we provide quick, precise bookkeeping services for many small limited Companies in Croydon that do freelance and contract work.

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.