Xero Cloud Based Accounting for Freelancers

 Freelancers frequently have to manage many elements of running a business, and having the correct tools to keep track of their finances is crucial. Using Xero accounting software, which is specifically developed for Freelancers to handle their accounts, could be exactly what you need.

As Xero Platinum Advisors, we have gathered first-hand knowledge from our clients to provide you with some ideas and guidance to help you get the most out of managing your accounts in order to reduce your admin time and focus on your day-to-day work.

1. Begin an organised structure.

The techniques below can help you maintain an organised framework and modify the way you think.

The actions below can help you maintain an organised framework and improve the way you do business for the better. Being organised is critical for your business since without it, you may struggle to manage your funds, which could lead to legal and financial consequences later on. So, when you start freelancing, get on top of it right away!

• Make it a habit to do your accounts every week so that they don't pile up and you're always up to date.
• Set out a certain period each week or month to do your accounts so you don't get behind.
• Xero will assist you in running your business! You can track your cash flow, income, and expenses all in one location by entering all of your documents into the software functions.
• If your budget allows it, try employing a bookkeeper to assist you manage your accounts if you become overwhelmed with paperwork.

2. What documents are needed for a well-organized accounting system?

These records are necessary to keep your system organised and should be entered into your Xero accounting software on a weekly basis. In the long run, this will ensure that you have all of the paperwork that your accreditor requires.

We have mentioned below all of the records that should be recorded into your Xero accounts software weekly to guarantee that you have prepared all of the documentation that your accountant will need to complete the end of year accounts swiftly and easily. They are also necessary if you are ever asked to conduct an audit by HMRC.

• Client invoices that are correct
• Personal and business costs
• Transfers between banks
• Client payments are collected
• Payments to suppliers
• You owe money to someone else.
• You owe money
• Total number of hours worked on a single task
• Each job's hourly rate
• Client information
• Material Bills of Materials for each project

3. Deductible Expenses for Independent Contractors

As a self-employed freelancer, you are allowed to claim a range of costs that are tax deductible. Remember to retain a record of your calculations in case you are ever examined (by HMRC) and need to explain them.

• Costs of travel
• Rent for an office
• Bills for telephone service
• Electricity bills
• Computer, printer, and phone expenses
• Some client amusement expenses

4. Manage Payments to ensure timely collections

Keeping an organised and up-to-date accounting system makes collecting payments considerably easier and more efficient. Late payments are also a significant issue for Freelancers. You can avoid late payments and additional stress by performing the actions outlined below.

• Prepare budgets and bids in minutes by using your time and cost estimates.
• Invoice on time and include all supplies and labour spent on the job.
• To ensure a speedy approval turnaround, send invoices by email or phone app.
• This also serves as written proof in the event that late payment becomes an issue.
• Xero can alert late payers, reducing time spent following down payments. Xero will show you which invoices are unpaid and overdue using an ageing summary report.
• Late payment must be pursued. Add a 'Pay now' button to online bills to expedite payment.
• If your job was done within the agreed-upon project scope and time limit, they are legally required to pay you. Late payers should be warned and dealt with on a regular basis.

5. Plan ahead of time for your taxes.

You must pay any due tax to HMRC when you complete your Self-Assessment each year. To prepare for this,

You must pay any due tax to HMRC when you complete your Self-Assessment each year. You should set aside money each month to meet this fee in order to plan for it. For this purpose, we propose opening a separate savings bank account.

You can utilise specialised reports in Xero to estimate your Self-assessment tax bill, which can then be used to calculate what percentage of your monthly earnings should be placed away in your bank account. Please keep in mind that you will need to record this money in your accounting system.

Cruseburke is a Platinum Xero Advisor and a recent mid-sized firm of the year winner. Please learn more about how we assist businesses utilising Xero accounting software.

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.