I am by no means an expert when it comes to finance stuff (Julia is your gal for that side of things!), but I thought I would share how I sort my bookkeeping as a freelancer who hated Maths at school and is not the least bit numerically-inclined.

Doing your bookkeeping sounds like a boring and difficult thing, but it really doesn’t have to be. In fact, if you like being organised like I do then bookkeeping is weirdly therapeutic. No, really – it can be!

Being in control of your expenses and sales is crucial as a freelancer for two reasons:

  1. It will help you enormously when it comes to submitting your self-assessment
  2. It will also help you see where your business is at to see if you are making a profit, breaking even or making a loss

There’s no need to panic if you aren’t immediately making a profit with your business. This is because it’s pretty rare to be making a profit straight away and it really depends on the costs associated with running your business as to how long it can take to make a decent amount as a self-employed person.

My income bounces all over the place month by month and is still at a pretty low level as a new business – so that’s why bookkeeping is fundamental to keep me in control of my finances.

So here’s how I manage to keep things organised:

By using online accounting software

Using accounting software helps keep everything all in one place – I use Wave Apps which allows me to:

  • Upload receipts and assign the expense into categories (for example Vehicle – Fuel for my petrol receipts). When you upload the receipts Wave can often pick out the monetary amount as well as the “merchant” from an image alone. Pretty nifty!
  • Create estimates to send to potential clients, giving them an official-looking document and a way for me to record all of my estimates in one place.
  • Generate and send invoices to clients for work. Wave also has a reminder function so you can automate reminder emails if a client is yet to pay.

All of the above is completely free through Wave – you only need to start paying for the more advanced features such as accepting payments through Wave itself. I accept payments via BACS transfer which has always worked for me! Once a client has paid, I set the invoice as paid and can even generate an automatic receipt for clients. Both the invoices and receipts are fully branded to my business too.

By having all of payments and sales in one platform, my self-assessment is a breeze because I don’t need to start scrambling around looking for a receipt for stationery I bought for the business 6 months ago!

By recording my receipts as and when I get them

It’s tempting to stash away receipts for a rainy day when you have more time to dedicate to the dreaded “business admin”. I get it. But actually, you’ll save yourself time in the long run by recording your receipts as and when you get them.

I remind myself about my receipts by taking them out of my purse and putting them on my desk as soon as I get home. That way they are there as a reminder and can be filed away as soon as I’ve snapped a pic and uploaded it to my accounting software properly.

There is some debate about whether you need both digital and physical copies of receipts – but I prefer to have both for insurance! I keep my physical receipts paperclipped together by month and stashed away in a plastic folder inside my “business box” which is basically a box file with anything and everything I need to prove to HMRC that I am #legit.

By updating my mileage as soon as I can

I use calendar-blocking to keep track of my working day, and as a part of that I also mark out the times where I travel and highlight them in a different colour. This way I can stay on top of exactly when I travelled and where.

This way, if I don’t get to record the mileage for travel done in a day straight away, I can go back in my calendar and see when and where I travelled to update my spreadsheet according.

My mileage spreadsheet includes:

  • Date of travel
  • Where I travelled from
  • Where I travelled to
  • The purpose (e.g. meeting)
  • Time out and time returned (if applicable)
  • The total mileage for that journey (usually calculated by Google Maps)

Remember to only record journeys related to your business – and to keep a running total of the mileage covered by using the total sum function in Excel. If you’re organised with your calendar-blocking, you could easily get away with recording mileage once a month if you don’t travel often.

By using a cash flow forecast

A cash flow forecast allows you to record your earnings and outgoings in one spreadsheet and categorise them accordingly. You may be thinking this is a slight doubling up of using a piece of accounting software, but I had a cashflow forecast built for me by a business advisor and it’s a much clearer, more concise way to measure everything going out and coming in.

Looking back at a cashflow forecast also allows you to see any trends in both sales and spend to budget accordingly.

To make sure my numbers all add up, I export a copy of my bank statement to an Excel spreadsheet and go through my transaction, highlighting them according to the categories on my cash flow forecast. For example, if I have a payment from a client for a copywriting project, I will highlight that in a certain colour on my bank statement and then add up the amounts to add to my cash flow forecast sheet.

It can be a bit fiddly if you have a lot going in and out of your bank account, but my transactions tend to be low in number so this will generally take me an hour or two at the most, once a month at the beginning of a new month.

This is how I do my bookkeeping as a freelancer with a small business that has relatively low expenses. Although some of the work is manual, I feel better for having checked the numbers instead of relying on a system to do it for me! 

Have any questions about doing your bookkeeping as a freelancer? Let me know and if I can’t help, I can send you in the right direction.