What do you use to track your income and expenses when Self Employed?

Jon

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Obviously, once you earn more than £1000 you need to register with HMRC as Self Employed and while you may not pass the threshold to pay tax you still need to declare your incomings and outgoings.

For the last however many years I've been doing this manually vis Spreadsheet and as for expenses, I've been totally crap and claimed NOTHING, literally a big fat zero! I just couldn't get my head about keep tabs on it while I was working full time as well but now I'm 100% self-employed I wanted to do it as obviously, the less tax you have to pay the better!

I've spent the last few weeks playing around with different 'self-service' websites that offer a platform for 'one man band' type setups who are Self Employed as a Sold Trader and have ended up using FreeAgent

It's VERY easy to use, everything is in plain English and it even submits everything to HMRC for you when you want to so you don't have to go through their endless online forms! It can do everything for you which includes sending out invoices to people with your PayPal link, they pay and it all gets tracked automatically!






so how do you track everything with your online work?
 
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Jon

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Nice one, it's totally a PITA to manage. Software looks cool.
Yeah I think it can be a PITA and I really haven’t been helping myself with how I’ve been keeping track of everything so having everything in one place and 99% automates is probably the best solution for me!
 

BreeziOG

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I currently use Quickbooks Self-Employed, but was going to switch to Wave in the new tax year. Seeing this gives me another option to consider, so thanks @Jon :D

You've mentioned about being able to send invoices with paypal links... can I ask if there's an option to input bank information too, as some of my clients prefer to pay by BACS.
 

Jon

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I currently use Quickbooks Self-Employed, but was going to switch to Wave in the new tax year. Seeing this gives me another option to consider, so thanks @Jon :D

You've mentioned about being able to send invoices with paypal links... can I ask if there's an option to input bank information too, as some of my clients prefer to pay by BACS.
Yup you can do both :)
 
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Jon

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Am actually planning to send my first PayPal invoice through it tomorrow. It tracks the whole thing and can even send up chasing or “thanks for the payment” emails which you can 100% tailor
 

BreeziOG

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Cheers @Jon. Just another quick one, can logos/other branding be added to invoices?
I like the sound of it so far.
 

Jon

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Cheers @Jon. Just another quick one, can logos/other branding be added to invoices?
I like the sound of it so far.
Yup they can indeed. Click the link above and do the free 30 day trial, you get access to everything :)
 

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Well I've just sent my first invoice off through the system. Payment via Paypal. I need to work on tailoring the invoice template a bit as I think it's a bit generic at the moment and I could make it look a bit more snazzy alongside the 'Here is your invoice' email and all in all it's gone fine!
 

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Still using FreeAgent here. logging all the ENDLESS paypal fees I could have claimed as an expense when I've been paid via that method is pretty damn satisfying!!
 

Castro

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So you can take paypal fees off your income as an expense? Even though they've already come off?

So you get paid £10 in paypal and receive £9.46 in your account as fees are deducted immediately - do you then deduct the 54p from your £9.46 income as an expense??? Or were you previously reporting income of £10?
 

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So you can take paypal fees off your income as an expense? Even though they've already come off?

So you get paid £10 in paypal and receive £9.46 in your account as fees are deducted immediately - do you then deduct the 54p from your £9.46 income as an expense??? Or were you previously reporting income of £10?
Correct you would claim the 54p as an expense which would go under bank charge.

so you would add £9.46 as the money you made and put in 54p as a bank charge expense
 

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Correct you would claim the 54p as an expense which would go under bank charge.

so you would add £9.46 as the money you made and put in 54p as a bank charge expense
Sorry I might be being dense here; but does that mean that you would reduce the £9.46 by 54p again to get the amount of profit you would have to report to hmrc??
 

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Yes your profit is £9.46 and then you would claim the 54p banking fee as an expense
 

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Well, I'm not a fully paid-up member of FreeAgent.

First thing I did was claim it as an expense in the system lol

If you want to sign up with 10% Discount feel free to use my link http://fre.ag/48nqq5ga which takes the annual cost down to £80 odd

Been spending most of this morning adding expenses I've spent from April last year until March 6th this year which is when I started using FreeAgent.
 

Castro

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Well, I'm not a fully paid-up member of FreeAgent.

First thing I did was claim it as an expense in the system lol

If you want to sign up with 10% Discount feel free to use my link http://fre.ag/48nqq5ga which takes the annual cost down to £80 odd

Been spending most of this morning adding expenses I've spent from April last year until March 6th this year which is when I started using FreeAgent.
Do you use cash basis?

Does this mean that stock you buy is counted as an expense when you buy it rather than when the item sells?

Still trying to get my head around all this and what's the best way forward for me. Don't think i make enough to justify an extra £80 a year expense though.

Thanks!
 

Jon

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Do you use cash basis?

Does this mean that stock you buy is counted as an expense when you buy it rather than when the item sells?

Still trying to get my head around all this and what's the best way forward for me. Don't think i make enough to justify an extra £80 a year expense though.

Thanks!
nope I don’t deal with any cash. Everything is electronic

Why not give the free trial a whirl and see what you think!
 

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nope I don’t deal with any cash. Everything is electronic

Why not give the free trial a whirl and see what you think!
No I meant accounting wise!

Cash basis = account for everything when it happens, cash in when you receive it, cash out when you spend it - no accruals etc

Standard accounting - account for stuff in the year it applies eg stock purchases are only an expense once item has sold; paying insurance for upcoming year is a prepayment; accrued income etc.

Typically cash basis will give you a lower tax liability if your stock/expenses is increasing (you're buying more stock so more expenses so less taxable £) and higher liability when stock is decreasing (eg you bought stuff for £500 last year and sold for £1000 this year but because you accounted for the £500 expense last year your taxable profit on the sale is £1000)



Hope that makes some sense !?
 

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No I meant accounting wise!

Cash basis = account for everything when it happens, cash in when you receive it, cash out when you spend it - no accruals etc

Standard accounting - account for stuff in the year it applies eg stock purchases are only an expense once item has sold; paying insurance for upcoming year is a prepayment; accrued income etc.

Typically cash basis will give you a lower tax liability if your stock/expenses is increasing (you're buying more stock so more expenses so less taxable £) and higher liability when stock is decreasing (eg you bought stuff for £500 last year and sold for £1000 this year but because you accounted for the £500 expense last year your taxable profit on the sale is £1000)



Hope that makes some sense !?
Ah sorry yeah you can

Your bank or PayPal feeds download every night into field agent automatically and you can just one click Mark things as a “sale” or an “expense” etc

Don’t forget the cost of Freeagent would be an expense!!
 

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