The Freelancers Guide to Accounting

Written by Chloe Harwood

The working world is changing with each passing day. No longer are businesses defined by an office space within a city or a town. Today we are globalised and connected all across the world. With potential offices in several locations, staff working from home and work outsourced overseas it’s never been easier to work as a freelancer. Once issues with becoming freelance meant problems understanding the complex tax laws which used to threaten to derail potential freelancer’s dreams. Luckily in the spirit of nomadic workspaces we have seen a rise in the number of cloud based products hitting the market. This includes cloud based accountant software such as Xero and Sage Page which reduce the accounting process down, making it simple for freelancers to use and understand.

It is estimated that 53 million people are working freelancer in the U.S alone. This makes up for 34% of the workforce. This number is expected to rise significantly. Freelancers contribute to an estimated $715 billion dollars’ worth of earnings. It is therefore essential that these freelancers are getting the correct accounting support needed. Our friends at Alexander have put together a list of the essential things all freelancers need to know.

The infographic they have collated identifies three vital tools for all freelancers who are looking for accountancy help. The first tool they look at is Fresh books who look to simplify online invoicing and expense tracking. Wave accounting is a free tool which features online invoicing and expense tracking in an easy and effective manner. The final tool that Alexander recommend is the billings tool. This tool provides professional invoice templates as well as one click invoicing and time and expense tracking. These tools are perfect for freelancers on the go, who will be able to access the software anywhere at any time.

The feedback from businesses who use cloud based accounting software is telling. 92% of businesses have reported being totally satisfied with cloud based services showing just how valuable they are considered. A further 82% of businesses reported that these services helped them to save money and other 80% said they saw improvements in their workflow and reporting by the sixth month. These statistics are all heavily in favour of cloud accounting and their abilities to improve freelancers and small business owners lives and accounting needs.

The reasons to adopt cloud accounting tools are clear. With anytime access, anywhere in the world and a reduction in overheads it’s easy to see why freelancers and small business owners alike are switching to cloud based accounting software.

Alexanders infographic also looks at what freelancers can claim back on expenses. Luckily the list is long, we have selected some of the more common one is for you to digest. The most important items which can be claimed back are car mileage (45p per mile for the first 10,000 miles), hotel costs if away on business as well as lunch costs of up to £5 a day. Household bills are also claimable if you work from home you may claim up to £4 a day.

With so many advantages for freelancers to switch to cloud based accounting it is easy to see why so many freelancers are beginning to switch today. It is always recommended that any use of cloud based accounting tools are looked over by a professional accountant to ensure that everything is in place. If you are looking for an accountant to oversee your books then contact Alexander for quality, professional advice.

About the author

Chloe Harwood