The freelancer’s financial checklist

If you’re thinking of turning to a freelance career, here are a few things you need to consider from an accounting perspective.

We advocate really getting a handle on your accounting so that you completely understand the literal ins and outs of your income. You can always outsource your bookkeeping, VAT returns and other more routine aspects once you fully understand how it works.

We are here for business advice, to help you grow and, of course, for tax advice to help you keep as much of your earnings as possible.


Start-up costs. How much will it cost for you to actually get your freelance career off the ground? Make a list and cost it prudently. You’ll need a place to operate from, a company /business name, logo, phone number, possibly a means of transport, a computer for communications, invoicing and admin, a website, social media accounts and any specific costs relating to the service you are offering.


Don’t overspend. Just invest enough to get you operational in a professional way until you are making enough money to spend further.


Training. Is there anything you need to know that you can learn beforehand? Factor in any training costs but bear in mind there are plenty of free courses available.


Keep everything! Hold on to any receipts that relate to business expenditure. If you are uncertain, keep it anyway. Software and apps such as Receipt Bank are quite useful if you have a lot of receipts that need filing and sending directly to your business accounting software. It keeps your house in order and saves lots of time.


Get ready for digital accounting. Your accounts must all link together digitally if you are going to be VAT registered. It’s easier than it sounds thanks to some very good proprietary software that we can recommend and train you in. FreeAgent is one such platform that we like for freelance businesses.


Check your status. It is worth us doing a review of your business plans so we can check that being a sole trader or a limited company is the correct route for your business type.


Set up a dedicated bank account. You will need to separate your business and personal accounts.


Should you register for VAT? Talk to us about being VAT registered as this applies only to businesses with a turnover above £85,000. However it can be worthwhile if you are paying VAT registered suppliers regularly.


Set aside your taxes. It’s vital that you charge VAT if you are VAT registered and that you keep a % of your payments in anticipation of paying your taxes. You must also do this for your self-assessment tax bill and corporation tax if a limited company. A chat through your figures will allow your accountant to help you know how much to save and roughly predict your liabilities in advance.


Understand your costs. At a very basic level, make a list of your overheads. This might include office rent, equipment, supplies, phone bills, broadband costs and travel. It’s key to know how much of your overheads are required for each project you undertake so you are able to set your fees or pricing accordingly. We can help with this. We can also show you how your overheads and set up costs can be set against your tax bill.


Be IR35 aware. This is a government regulation, currently in review, that looks at how your freelance tax status compares to that of an employee of your client. This is an area we can help with.


Think about the future. Setting up on your own is an exciting, brave step. One of the things you are losing is the predictability of a regular income. Prioritising savings and working towards building a pot of money for the leaner times is a wise move – it offsets some of the potential anxieties a freelancer can face. Possibly even further into the future you’ll need to retire so, at the right time, start to factor in financial plans for then, even if it seems a long way off right now! Again, this is something we are able to guide you on.


Choose an accountant. We specialise in freelance and consultant clients as well as SME business owners (so we are still of huge value should you grow into something bigger!). We do recommend that you find someone with whom you have a good connection, who shows an interest in your business and, of course, who knows their stuff. We would be delighted to help.

Talk to us at the earliest stage of your career plans, we can help you start out and do things properly straightaway, saving lots of time in the future. Our next freelancer article will cover branding, marketing and how to get your offering in front of the right customers.

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