Accounting for Freelancers

When you're a self-employed freelancer, you can get stuck doing all the admin work yourself. That's why using freelance accounting software is so important. It takes care of your finances while you focus on your freelance career. 

Regardless of what stage your freelance business is in, improving your financial management skills will save you time and stress as you work on the success of your business. 

Read on to discover why accounting is essential, what accounting software will work best for your small business, and a step-by-step process on how to do accounting for your business. 

The Importance of Accounting For Freelance Businesses 

When you're working as a freelancer, you're often juggling many clients at the same time. This makes it challenging to keep track of the clients who owe you money and the amount they owe. 

Even if you already have an accountant, knowing basic bookkeeping can be really useful. An accountant may only review your finances a set number of times a year, bookkeeping lets you get a more ‘immediate’ view, which is especially helpful if you make daily updates. 

Understanding the basics of bookkeeping and using accounting tools allows you to keep track of any outstanding invoices to make sure that you collect the payment you earned. It shows you the state of your cash flow and ensures you don't miss out on sending invoices to your clients. 

If you often need more time to maintain your accounts regularly, you should invest in freelance accounting services or accounting software. This will take time off your schedule to spend more time doing the work you care about.

What is Needed For Accounting Software As a Freelancer

Accounting can be complicated when all your important information is in different files and formats such as spreadsheets, invoices, word documents and physical books. But with accounting software, this can all be contained in one place, which makes accounting for freelancers a lot simpler. 

Accounting software also typically provides helpful dashboards containing important information about your business. It helps you create and send invoices and bills, and offers insightful reports to view your income at the end of the tax year. 

Comprehensive accounting software, like QuickBooks, does not just stop with basics but also includes additional features such as integration with online payments, project management, receipt scanning, and bank integration.

When looking for accounting software for freelancers, it's essential to ask yourself four critical questions: 

• Is it user-friendly? Good accounting software designed for people who are self-employed understands that time is limited, and time spent learning how to use the software can be costly.
• What accounting features does it have? Good accounting software includes helpful features such as expense tracking, invoice tracking and, if needed, extra features like inventory management. 
• Is it a cloud based solution? A cloud based solution allows you to access your receipts, record of expenses, invoices etc. from your phone, tablet or computer.
• Is it a good value for money? Good accounting software for the self-employed is both flexible in features and at a price that is reasonable for your business.

You need the right app to meet specific needs. Accounting software for freelancers should include the following:

1. Invoicing software. Invoicing tools are excellent for digitally tracking your real-time payments and sending automatic invoices to clients. These should include unlimited invoices and freelance invoice templates for you to choose from. 
2. Expense tracker. Expense trackers are an essential tool to help you take control of your expenses from any location. Connect all your accounts, and let the app automatically import your expenses and income regularly. 
3. Accounting reporting software. Financial reporting software allows you to access financial statements, reports, and smart insights easily. This will help you organise your data and create accurate business reports. 
4. Job costing software. Job costing and tracking software will allow you to see which jobs are bringing in money and which aren’t.
5. Bank feed integration. This is a great feature to help you reduce errors and save time when you connect your bank to your accounting software. This will allow you to get a complete view of your finances. 

QuickBooks accounting software has all of the above mentioned features. The onboarding process is relatively quick and simple, you can even get a free 30-day trial. 

How to Do Accounting As a Freelancer

Here are some simple tips to help your accounting efforts as a freelancer be more efficient:

1. Record Keeping

You should record the following parts of your business:

• Payments received
• Payments for business expenses such as tools used for a job
• Receipts for expenses
• Fees for essential licenses or banking transactions
• The hours you spend working by job or client
• The cost per job or hour for all clients
• If your work involves travel, the distance and time spent travelling

2. Organisation 

Organisation is an essential part of good bookkeeping. You may struggle to manage your finances without it. So create a routine for yourself:

• Make space in your day to do your books every week 
• Use reputable accounting software and let a bookkeeping or accounting professional check your inputs to ensure they are correct

3. On time pay

Being organised and keeping record of all business activity means you will be able to keep track of all invoices.To help ensure on-time payment consider implementing the following:

• Invoice regularly and promptly
• Identify late payers at a glance and quickly discover which clients are problematic
• Set reminders to notify you when the due date for an invoice is approaching.
• Remind your clients to pay you if they are late.

Wrapping Up

One can easily lose sight of the big picture when they're constantly working for multiple clients. With good accounting practices and software, you’ll have a clear idea of cash flow, expenses, income, and business growth. Take control of your accounting. With the right software, you'll gain invaluable insights into your freelancing business. Visit the QuickBooks website to discover what we can do for you.