Accountants for Freelancers
Welcome to Level Accounting, specialist accountants for freelancers
We are Level Accounting, a freelancer and contractor accountant in Bolton. We help hard working, self employed individuals and small businesses with all of their accounting needs.
Our straight-talking and friendly team of accountants take the time to get to know our clients’ businesses inside-out. We’re passionate about helping them succeed and making their life easier.
Our services include bookkeeping, tax advice, online accounting and VAT returns, as well as financial planning and business advice. So whether you’re just looking for a hand with your books or looking to expand your empire, we’d love to help.
And the good news doesn’t stop there, as we can even offer you a free consultation. So either fill in our contact form or Whatsapp us, and one of our qualified accountants will be in touch.
What is a freelancer?
A freelancer is a self employed individual who takes on projects for multiple companies on a flexible basis. They usually specialise in one area, but can offer a range of services. They will pitch and quote for a job and, if successful, agree the terms of the project and payment with the employer.
Projects vary from short to long-term and, usually, a freelancer will work from their own home or business premises.
‘Freelancer’ isn’t a business structure. Most freelancers tend to be self employed sole traders, and as such they are responsible for their own tax returns and National Insurance contributions.
Can freelancers form a limited company?
If, as a freelancer, if you establish a profitable and successful business, you may choose to register as a limited company. This gives you personal protection against any debts your company incurs, and allows you to be more tax efficient.
As a limited company, you must submit a Corporation Tax return as well as a personal tax return if you pay yourself a salary and share of the profits.
If you earn more than £85,000 per year, you must also register for VAT.
What’s the difference between a freelancer and contractor?
A freelancer tends to work for multiple clients at any one time, whereas a contractor will usually just work for one client until the job is done.
From a tax point of view, they are the same thing, and are both required to submit a self assessment tax return to HMRC.
Freelance work is most common in the creative industries, whereas contractors are more likely to work in fields such as construction or IT.
What records does a freelancer need to keep?
A freelancer must complete a self assessment tax return and is required to keep a record of all of their financial transactions by logging receipts, expenses, invoices, grants and VAT (if applicable).
As of April 2024, sole traders earning in excess of £10,000 per year will be required to keep their records digitally under the government’s Making Tax Digital scheme. That means they must used approved software and submit quarterly and end of year reports to HMRC.
If you require help with digitising your accounts, then Level Accounting are ideally placed to help, as Xero Silver Partners.
What expenses can a freelancer claim?
Like other small businesses, as a freelancer you are entitled to claim expenses before tax. These are costs that are incurred in the course of doing your job, not personal expenses. They include:
- Office equipment and consumables
- Travel expenses to work meetings
- A portion of household bills (if you work from home)
- Marketing and subscriptions
- Professional fees, (such as accountancy…)
Why do freelancers need an accountant?
As a freelancer you are no way obliged to hire an accountant. But when you’re flying solo, keeping on top of your accounts and doing your job at the same time can be tough.
It can be a very savvy investment to pay for the services of a professional accountancy firm to ensure your accounts are kept up to date and so you stay on the right side of HMRC. That way, you can get on with what you’re paid for, and enjoy your earnings without the nag of accounting worries.
When it comes to freelancer expenses and tax, it’s valuable to have a great accountant in your corner. We can help you to identify allowable expenses and tax savings, so that you can keep as much of your hard earned cash as possible.
If your business is going great guns and you’re looking to expand, a good accountant (hello!) can also assist you with financial planning services to prepare for business growth.
Contact Level Accounting to find out how we can support your freelancer business
If you are looking for freelance or contractor accountants in the Bolton and Lancashire area, then you can do no better than Level Accounting.
We will work hard on your behalf to get to know your business and you can be sure we’ll have your best interests at heart. We’re here to help make accounting easy and support you every step of the way.
To contact us, fill in our contact form or send a message via Whatsapp – we look forward to speaking to you.
Bookkeepers differ from accountants in that they do just that - keep your books. That means logging your income and expenses and reconciling it each month. This is a valuable service for a freelancer, giving them more time to focus on their job and to ensure their accounts are kept accurately. Otherwise, all hell can break loose come year end when you have to submit your tax return.
The important thing to remember is that a bookkeeper does not have to be professionally qualified, so it's important to know who you are employing.
An accountant is a qualified finance professional who can offer bookkeeping, sure, but a whole lot more. We can help you navigate the early days of your business, including liaising with HMRC and Companies House. If you choose, we can take on your tax and VAT returns entirely, preparing them on your behalf.
For established businesses, accountants can offer valuable business advice, plus financial reporting and forecasting to help your company grow.
It may be in the early days that you can only afford basic bookkeeping services, in which case go for it if you find a reputable bookkeeper. It may be worth considering hiring an accountant at least to help you with your annual returns, and investing in a more involved accountancy package as your business grows.
If you are a freelancer earning over £10,000 per year, then you will be required from April 2024 to keep digital records of your finances under Making Tax Digital. You will have to submit quarterly reports and an end of year tax statement to HMRC using compatible accounting software, such as Xero.
Level Accounting are Xero Silver Partners, and we can't recommend this intelligent yet easy to use software enough. It allows you to access your finances in real time, on any device, wherever you are, making it far easier to keep your accounts in order. Even if you are below the £10,000 threshold, Xero can make your life a whole lot easier and we'd love to show you how.
Sole trader freelancer
Once your freelance work earns you more than £1,000 per year, you should register with HMRC for tax and begin to submit a yearly self assessment income tax return. When you start to exceed your personal allowance (currently £12,750), then you will start to pay tax, which you are responsible for calculating correctly.
Your income tax bill is worked out by taking your total business expenses from your annual income. That is the amount you will pay tax on. The rate of tax for businesses earning under £50,270, is currently 20%.
If you file your return late or HMRC find inaccuracies, then you may receive a fine. That's when it pays to have qualified accountants at your service, to ensure that you stay compliant.
If your freelance business expands you may opt to set up a limited company. You will then be liable for Corporation Tax. If your company's earnings are in excess of £85,000 per year, you must also register for VAT and submit a VAT return using software approved for Making Tax Digital.
Level Accounting can help you with advice on limited company formation and ensure you meet your new tax obligations.