Freelancing as a Sole Trader

[LetterFit]

Hello! Making my first foray into freelancing. Does anyone know of a really simple, basic template I can use for keeping finances/accounts in order? Or what categories do I need to allow for in an excel spreadsheet. I am basically selling design services, working from home, so there are little/no overheads. Hope someone wiser than me can help/advise! Thanks so much x

[doadeer]

Simple would be two tabs.

Outgoing and incoming

Outgoing expenses: date, item, supplier, category (eg equipment, travel)

Incoming : date issued, invoice number, recipent, date invoice funds received.

Is this what you mean?

[Badbadbunny]

There's a free desktop book-keeping system called VT cashbook which is excellent for the simple recording of monies in and monies out and which comes with templates for typical "chart of account" (accounts categories) for sole trader/self employed. You can download it free from www.vtsoftware.co.uk/. (I'm not affiliated in any way - we use it in house for client book-keeping and recommend it for sole trader clients).

[LetterFit]

Yes i think that is probably the basics of it Doadeer, is there a list anywhere of categories I can legit claim as a business expense?

Thanks for the tip there Badbunny I'll look at that!

[Badbadbunny]

is there a list anywhere of categories I can legit claim as a business expense?

A good starting point is the tax return itself which gives you the headings you'll have to fill in.

But, every business is different, so something may be allowable for one, but not allowable for another. Best to think of the main rules first rather than individual headings.

It's all about motivation and actual use of whatever you buy. If you buy something purposely to sell it, then the cost is clearly allowable.

If you need to buy something needed to run/grow the business and don't use it for private use, then again, clearly allowable, such as a computer, advertising, website, business insurance, train fare to visit a client, etc etc.

The problem areas are the "dual purpose" areas where a cost is incurred partly for business and partly for private use, i.e. when you use part of your home for business, or you use your car for both business and private journeys. You have to apportion costs.

Then there are things which are specifically non allowable such as gym memberships, children's nursery fees, your own private healthcare, etc.

Most accounting software will come with a chart of accounts which gives a good range of headings to give you an idea/reminder of what typical businesses would claim for.

[Devlesko]

What you can claim as self employed or business i.e Ltd company varies.
I'd look at setting up a business, we have far more benefits as a Ltd as we did freelance self employed.

[JamieLeeCurtains]

There are pretty some good HMRC webinars you can sign up to.

[LetterFit]

Thanks for that Badbunny!

Devlesko—I'll definitely be starting out under the £70K mark (or whatever it is) so not sure Ltd will be a realistic option, but its good to know for the future!

JamieLee—Thanks I'll look those up!

[Devlesko]

So are we OP, and honestly never looked back since dh went from freelance self employed to small business.
Honestly, we are on the breadline, it still works out far better.
Just have a look, it might be better it might not.
Of course it's easy to go from the former to the latter so you could always look in the future. Just thought I'd mention it.

[LetterFit]

Thanks Devlesko! don't know why my reply there got all scored out either, sorry about that 🤣

[JamieLeeCurtains]

You can sign up here, @LetterFit. There are info pages & webinars on lots of topics including tax deductibles.

www.gov.uk/government/collections/hmrc-webinars-email-alerts-and-videos

[BrazenlyDefying]

I do what you do. I don't buy stuff, add value and sell it on - so most accounting packages do more than I need. I'm really selling just my time.

I use slickpie (free) for my invoicing. I keep an excel spreadsheet with details of what was paid, with a separate column for each client which is fairly simple as there are only a few at any one time. I am far from an Excel fan - but I can total down columns and across rows which is all you need. New tab/sheet for each tax year.

[LetterFit]

Thanks both!